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Type: Journal Articles
Published in: Econometrica
Volume, issue, pages: Vol. 66, No. 4, pp. 827–61
Previous version: IFS Working Papers [Details]
The 1980s tax reforms and the changing dispersion of wages offer one the best opportunities yet to estimate labour supply effects. Nevertheless, changing sample composition, aggregate shocks, the changing composition of the tax paying population, and dicontinuities in the tax system create serious identification and estimation problems. We develop grouping estimators that address these issues. Our results reveal positive and moderately sized wage elasticities. We also find negative income effects for women with children.
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