Labor Supply Responses to Learning the Tax and Benefit Schedule

Andreas R. Kostøl and Andreas Myhre ()

American Economic Review, 2021, vol. 111, issue 11, 3733-66

Abstract: Despite the implications for policy, empirical evidence on the relative importance of factors that shape labor supply responses is missing. This paper helps fill this gap and quantifies the role of information frictions versus other frictions by combining notches in the Norwegian welfare system and quasi-experimental variation in access to information about the slope and location of kinks. While we estimate a frictionless elasticity of 0.3, overall frictions attenuate this elasticity by about 70 percent. We find the information letter increased the earnings elasticity from 0.06 to 0.15, implying that information frictions account for at least 30 percent of total attenuation.

JEL-codes: D83 H24 I38 J22 J28 J31 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/aer.20201877 (application/pdf)
https://doi.org/10.3886/E144121V1 (text/html)
https://www.aeaweb.org/doi/10.1257/aer.20201877.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/aer.20201877.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Labor Supply Responses to Learning the Tax and Benefit Schedule (2020)
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:aea:aecrev:v:111:y:2021:i:11:p:3733-66

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

DOI: 10.1257/aer.20201877

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().