Research
Job Market Paper
Taxes, Transfers, and Time Use: Fiscal Policy in a Model with Household Production (pdf)
Abstract
A household production model is developed where the public provision of "home goods", such as day care, plays a prominent role. This model accurately predicts market and home sector labor supply patterns for a broad group of O.E.C.D. countries given empirical measures of fiscal policy parameters. Accounting for the structure of public expenditures is important for model predictions and welfare analysis. Compared to the U.S., the welfare losses associated with fiscal policies in some European countries amount to ten percent of market and home goods consumption. Optimal policy rules are computed under alternative assumption regarding how public revenues are generated.
Figures (pdf) Tables (pdf)
Labor Supply and the Tax Reform of the Century (pdf)
(joint with Martin Ljunge)
Abstract
We estimate the elasticity of earned income to the net of marginal tax rate following the very large 1991 tax reform in Sweden. Earned income measures both quantitative and qualitative margins of labor supply. We estimate an explicit behavioral model in static and dynamic settings using detailed individual panel data. In the dynamic setting we estimate both marginal utility constant models as well as models that account for the effect of an unanticipated tax reform on the life time budget constraint and the marginal utility of wealth. We find large responses to the tax reform, with elasticities of about 0.35 on the intensive margin.