EconPapers    
Economics at your fingertips  
 

Do only tax incentives matter? Labor supply and demand responses to an unusually large and salient tax break

Alisa Tazhitdinova

Journal of Public Economics, 2020, vol. 184, issue C

Abstract: I explore labor supply responses to an unusually large and salient notch generated by the “Mini-Job” program in Germany. Using administrative data, I document three findings. First, despite the unusually large magnitude of incentives, earnings elasticities are modest, even after accounting for frictions. Second, the observed response cannot be fully attributed to labor supply alone; rather, the observed outcomes are highly dependent on the availability of jobs and, so are strongly influenced by labor demand incentives. Third, I show that these firm incentives are likely driven by the fact that mini-job workers receive lower fringe-benefit payments.

Keywords: Payroll tax; Income tax; Earnings elasticity; Fringe benefits (search for similar items in EconPapers)
JEL-codes: H20 H22 H24 H31 H32 J22 J23 J32 J38 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0047272720300268
Full text for ScienceDirect subscribers only

Related works:
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:eee:pubeco:v:184:y:2020:i:c:s0047272720300268

DOI: 10.1016/j.jpubeco.2020.104162

Access Statistics for this article

Journal of Public Economics is currently edited by R. Boadway and J. Poterba

More articles in Journal of Public Economics from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().

 
Page updated 2021-03-28
Handle: RePEc:eee:pubeco:v:184:y:2020:i:c:s0047272720300268