Taxpayer responses in good times and bad

Enda Hargaden

Journal of Economic Behavior & Organization, 2020, vol. 176, issue C, 653-690

Abstract: I show that the magnitude of taxpayer responsiveness, a key parameter in public finance, varies through time. Using linked administrative data and identifying responses from changes in notches, I document a marked decline in responsiveness during the Great Recession that cannot be explained by increased enforcement. I characterize which employee–employer pairs are best at reporting tax-advantaged incomes. Workers in industries with above-average responsiveness, such as construction, were disproportionately affected by the recession. I show responsiveness also declined for workers who remained matched with the same employers throughout the period.

Keywords: Taxable income; Behavioural response; Notches; Bunching (search for similar items in EconPapers)
JEL-codes: E62 H24 H26 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:176:y:2020:i:c:p:653-690

DOI: 10.1016/j.jebo.2020.05.003

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