Taxation and the Labor Supply: Decisions of the Affluent

   (1927 K)

We examine the effect of the 1996 Tax Reform Act on the labor supply of affluent men. The Act reduced marginal tax rates for the affluent more than for other taxpayers. Using instrumental-variables methods with a variety of identifying variables, we find essentially no responsiveness of the hours of work of high-income men to the tax reduction. However, we do find hourly wage rates of such men to have increased over the period.

Published: Slemrod, J. (ed.) Does Atlas Shrug? Economic Consequences of Taxing the Rich. Russell Sage Foundation and Harvard University Press, 2000.

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