Tax Reforms and Intertemporal Shifting of Wage Income: Evidence from Danish Monthly Payroll Records

Claus Kreiner, Søren Leth-Petersen and Peer Skov

American Economic Journal: Economic Policy, 2016, vol. 8, issue 3, 233-57

Abstract: This paper uses monthly payroll records for all Danish employees to identify widespread intertemporal shifting of labor income in response to a tax reform that significantly reduced the marginal tax rates for one-fourth of all employees. When ignoring shifting, the estimate of the overall elasticity of taxable income equals 0.1, and the elasticity is increasing with earnings. When removing the shifting component, the elasticity is close to zero at all earnings levels. The evidence also indicates that tax salience, liquidity constraints and firm willingness to cooperate in shifting are important factors in explaining shifting behavior.

JEL-codes: H24 H31 J22 J31 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/pol.20140233
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Citations: View citations in EconPapers (44)

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Working Paper: Tax Reforms and Intertemporal Shifting of Wage Income: Evidence from Danish Monthly Payroll Records (2013)
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