Taxation and Excess Burden: A Life-Cycle Perspective

Edward Driffill () and Harvey Rosen ()

No 698, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A lifetime perspective is appropriate in assessing the welfare implications of government tax policies. Although a number of attempts have been made to ex- amine the excess burden of taxation in life-cycle models, these have tended to ignore the role of human capital accumulation and/or the leisure-income choice. In this paper, we do numerical simulations with a model that takes both of these phenomena into account. We find that under reasonable assumptions, the failure to take into account distortions of human capital decisions produces substantial underestimates of the excess burden of income taxation. In addition, allowing for the endogeneity of human capital increases the efficiency of a personal consumption tax relative to that of an equal yield income tax.

Date: 1981-06
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as Driffill, John E., and Harvey S. Rosen. "Taxation and Excess Burden: A Life-Cycle Persepective." International Economic Review, Vol. 24, No.3, (October 1983), pp. 735-749.

Downloads: (external link)
http://www.nber.org/papers/w0698.pdf (application/pdf)

Related works:
Journal Article: Taxation and Excess Burden: A Life Cycle Perspective (1983)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:0698

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w0698

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().