Template-Type: ReDIF-Paper 1.0
Author-Name: Tuomas Kosonen
Author-Name-First: Tuomas
Author-Name-Last: Kosonen
Author-Email: tuomas.kosonen@vatt.fi
Author-Workplace-Name: VATT Institute for Economic Research, Finnish Centre of Excellence in Tax Systems Research (FIT)
Author-Name: Tuomas Matikka
Author-Name-First: Tuomas
Author-Name-Last: Matikka
Author-Email: tuomas.matikka@vatt.fi
Author-Workplace-Name: VATT Institute for Economic Research, CESifo
Title: Discrete Labor Supply: Quasi-Experimental Evidence and Implications
Abstract: We provide quasi-experimental evidence of discrete labor supply. We utilize a novel institutional setting where a reform shifted an income notch to a higher income level, and compare earnings distributions of treated and non-treated individuals before and after the reform. We find transparent evidence of widespread changes in the earnings distribution, which is consistent with discrete but not continuous labor supply. We present a simple application for estimating changes in a distribution to detect discrete responses to local tax changes.
Length: 54 pages
Creation-Date:  2023-04
Publication-Status: Published in FIT Working Paper Series, Finnish Center of Excellence in Tax Systems Research
File-URL: https://verotutkimus.fi/verotutkimus/wp-content/uploads/2023/04/FIT-WP9-Discrete-Labour-Supply-1.pdf
File-Format: Application/pdf
File-Function: Revised version, 2023
Publication-Status: Published in VATT Working Paper Series
File-URL: https://urn.fi/URN:ISBN:978-952-274-254-4
File-Format: Application/pdf
File-Function: First version, 2020
Number: 9
Classification-JEL: J22,H24,H21
Keywords: discrete labor supply, tax elasticity, distributions
Handle: RePEc:fit:wpaper:9