Impact of the 2017 Tax Cuts and Jobs Act on Household Labor Supply and Welfare across the Income Distribution

Julie Hotchkiss, Robert Moore and Fernando Rios-Avila

National Tax Journal, 2024, vol. 77, issue 2, 313 - 348

Abstract: This paper estimates the change in optimal labor supply and household welfare resulting from the Tax Cuts and Jobs Act (TCJA) of 2017. We estimate labor supply elasticities using the Current Population Survey to simulate changes in optimal labor supply and welfare among households with different characteristics under the new TCJA tax code. Married household members reduce optimal hours post-TCJA; optimal hours increase among singles, except at the very top of the income distribution. All households’ welfare increased, on average, with gains disproportionately benefiting the wealthy, households with self-employment income or children, and most homeowners versus renters.

Date: 2024
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