Progressive Taxation in a Tournament Economy

Jeffrey Carpenter, Peter Matthews and Benjamin Tabb
Additional contact information
Benjamin Tabb: Middlebury College

No 8369, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Not enough is known about the responsiveness of individuals, in particular those who tend to work under different incentives, to changes in marginal tax rates. We ask whether changes in marginal tax rates are less distortionary for workers engaged in a contest. To examine this potential rationale for a more progressive tax code, we first model the effort decisions of workers faced with progressive taxation under tournaments and piece rates. Because of the difficulty identifying any distortion that may be induced by the tax code in naturally occurring data, we then report on the results of a real-effort experiment based on this model. Consistent with a behavioral approach to public finance, we find that tournament workers are less sensitive, and conclude with a tentative evaluation of the welfare benefits of progressive taxation in tournament economies.

Keywords: real effort experiment; public good; tournaments; taxation (search for similar items in EconPapers)
JEL-codes: C91 H20 H41 J22 J33 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2014-08
New Economics Papers: this item is included in nep-exp, nep-hrm, nep-lma, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published - published in: Journal of Public Economics, 2016, 143, 65 - 72

Downloads: (external link)
https://docs.iza.org/dp8369.pdf (application/pdf)

Related works:
Journal Article: Progressive taxation in a tournament economy (2016)
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:iza:izadps:dp8369

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().