 Estimating labor supply responses to Danish tax reformsHans Schytte Sigaard Journal of Public Economics, 2023, vol. 224, issue C Abstract: This paper estimates the elasticity of labor supply at the intensive margin by applying the latest estimation strategies from the elasticity of taxable income literature to administrative register data on performed hours of work. Performed hours of work are contract hours plus paid overtime, minus paid absence, vacation, and holiday leave. I estimate elasticities of labor supply at the intensive margin (ELS), labor income (ELI), and taxable income (ETI) of 0.08, 0.06, and 0.1. The results show that the high ratio of ELI to ETI can be attributed to changes in labor supply for wage earners, capturing inherent labor responses. As a result, I explicitly connect the labor supply and ETI literatures. The labor supply response is driven by changes in contract hours, paid absence, and individuals switching between main and secondary employment. These results suggest that contextual factors such as labor market fluidity and flexibility are important to facilitate real responses to taxation and that labor supply responses are core underlying drivers of total responses to taxation. Keywords: Elasticity of labor supply; Marginal tax rates; Tax reforms; Behavioral responses; Public economics (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:224:y:2023:i:c:s0047272723001251 DOI: 10.1016/j.jpubeco.2023.104943 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 |
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