Intertemporal Labor Supply Substitution? Evidence from the Swiss Income Tax Holidays

Isabel Martínez, Emmanuel Saez and Michael Siegenthaler

American Economic Review, 2021, vol. 111, issue 2, 506-46

Abstract: This paper estimates intertemporal labor supply responses to two-year long income tax holidays staggered across Swiss cantons. Cantons shifted from an income tax system based on the previous two years' income to a standard annual pay as you earn system, leaving two years of income untaxed. We find significant but quantitatively very small responses of wage earnings with an intertemporal elasticity of 0.025 overall. High wage income earners and especially the self-employed display larger responses with elasticities around 0.1 and 0.25, respectively, most likely driven by tax avoidance. We find no effects along the extensive margin at all.

JEL-codes: H24 H26 J22 J23 J31 R23 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/aer.20180746 (application/pdf)
https://doi.org/10.3886/E120797V1 (text/html)
https://www.aeaweb.org/doi/10.1257/aer.20180746.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/aer.20180746.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Intertemporal Labor Supply Substitution? Evidence from the Swiss Income Tax Holidays (2018)
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:2:p:506-46

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

DOI: 10.1257/aer.20180746

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 ().