I examine the response of husbands' and wives' earnings to a tax reform in which husbands' and wives' tax rates changed independently, allowing me to examine the effect of both spouses' incentives on ...each spouse's behavior. I analyze the large Swedish tax reform of 1990-1991 and find that in response to a compensated fall in one spouse's tax rate, each spouse's earnings rise. I compare these results to those of simplified econometric models used in the typical setting in which independent variation in each spouse's tax rate is unavailable. I find that standard econometric specifications may produce substantially biased estimates.
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We introduce a method for estimating the cost of adjusting earnings, as well as the earnings elasticity with respect to the net-of-tax share. Our method uses information on bunching in the earnings ...distribution at convex budget set kinks before and after policy-induced changes in the magnitude of the kinks: the larger is the adjustment cost, the smaller is the absolute change in bunching from before to after the policy change. In the context of the Social Security Earnings Test, our results demonstrate that the short-run impact of changes in the effective marginal tax rate can be substantially attenuated.
The classic model of Becker (1965, "A Theory of the Allocation of Time", Economic Journal, 125, 493–517) suggests that labour supply decisions should be analysed within the broader context of time ...allocation and market good consumption choices, but most empirical work on policy has focused exclusively on measuring impacts on market work. This paper examines how income taxes affect time allocation during the entire day and how these time allocation decisions interact with expenditure patterns. Using the Panel Study of Income Dynamics from 1975 to 2004, we analyse the response of single women's housework, labour supply, and other time to variation in tax and transfer schedules across income levels, number of children, states, and time. We find that when the economic reward to participating in the labour force increases, market work increases and housework decreases, with the decrease in housework accounting for approximately two-thirds of the increase in market work. Analysis of repeated cross sections of time diary data from 1975 to 2004 shows that "home production" decreases substantially when market hours of work increase in response to policy changes. Data on expenditures show some evidence that expenditures on market goods likely to substitute for housework increase in response to a greater incentive to join the labour force. The baseline estimates imply that the elasticity of substitution between consumption of home and market goods is 2·61. The results are consistent with the Becker model. Meanwhile, single men show little response to changes in tax policy, and we are able to rule out an elasticity of substitution between home and market goods for this group of more than 1·66.
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We estimate the impact of the Social Security Annual Earnings Test (AET) on older workers’ employment. The AET reduces social security claimants’ current benefits in proportion to their earnings in ...excess of an exempt amount. Using a regression kink design and Social Security Administration data, we document that the discontinuous change in the benefit reduction rate at the exempt amount causes a corresponding change in the slope of the employment rate, suggesting that the extensive margin of labor supply is more sensitive to this policy than commonly thought. We develop a model and method that allow us to translate the behavioral responses into a lower bound estimate of 0.49 for the extensive margin elasticity, which implies more than a 1 percentage point increase in work in the absence of the AET.
This paper investigates the effect of 401(k) eligibility on saving. To address the possibility that eligibility correlates across individuals with their unobserved tastes for saving, I examine a ...change in eligibility: some individuals are initially ineligible for their 401 (k) but become eligible when they have worked at their firm long enough. I find that eligibility raises 401 (k) balances. Other financial assets and net worth respond insignificantly to eligibility, but the confidence intervals do not rule out substantial responses. In response to eligibility, IRA assets increase, consistent with a "crowd-in" hypothesis, and accumulation of cars decreases.
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Parents may have important effects on their children, but little work in economics explores whether children's schooling opportunities crowd out or encourage parents' investment in children. We ...analyze data from the Head Start Impact Study, which granted randomly chosen preschool-aged children the opportunity to attend Head Start. We find that Head Start causes a substantial increase in parents' involvement with their children—such as time spent reading to children, math activities, or days spent with children by fathers who do not live with their children—both during and after the period when their children are potentially enrolled in Head Start.
► We analyze data from the Head Start Impact Study. ► This study granted randomly chosen children the opportunity to attend Head Start. ► Head Start increases parents' involvement with their children. ► This is true both during and after the children's pre-school years.
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Disability Insurance Income Saves Lives Gelber, Alexander; Moore, Timothy; Pei, Zhuan ...
The Journal of political economy,
11/2023, Volume:
131, Issue:
11
Journal Article
Peer reviewed
We show that higher payments from US Social Security Disability Insurance (DI) reduce mortality. Using administrative data on new DI beneficiaries, we exploit discontinuities in the benefit formula ...through a regression kink design. We estimate that $1,000 more in annual DI payments decreases the annual mortality rate of lower-income beneficiaries by approximately 0.18–0.35 percentage points, implying an elasticity of mortality with respect to DI income of around −0.6 to −1.0. We find no robust evidence of an effect of DI income on the mortality of higher-income beneficiaries.
Purpose The majority of randomized oncology trials are two-arm studies that test the efficacy of new therapies against a standard of care, thereby assigning a large proportion of patients to ...nonexperimental therapies. In contrast, multiarm studies efficiently share a common control arm while evaluating multiple experimental therapies. A major bottleneck for traditional multiarm trials is the requirement that all therapies-often drugs from different companies-have to be available at the same time when the trial starts. We evaluate the potential gains of a platform design-the rolling-arms design-that adds and removes arms on a rolling basis. Methods We define the rolling-arms design with the goal of minimizing the complexity of random assignment and data analyses of a platform trial. We then evaluate its potential advantages in hormone receptor-positive, human epidermal growth factor receptor 2-negative advanced breast cancer. Multiple pharmaceutical companies currently test CDK4/6 inhibitors in combination with letrozole in independent two-arm trials. We conducted a simulation study to quantify the reduction in sample size, number of patients treated with the standard of care, and the average time to treatment discovery if these therapies had been tested in a rolling-arms trial. Results A rolling-arms platform design with two to five experimental treatments can reduce the overall sample size requirement by up to 30% compared with standard two-arm studies. It assigns up to 60% fewer patients to the control arm compared with five independent trials that test distinct treatments. Moreover, under realistic scenarios, effective experimental treatments are discovered up to 15 months earlier compared with separate two-arm trials. Conclusion The rolling-arms platform design is applicable to a broad variety of diseases, and under realistic scenarios, it is substantially more efficient than standard two-arm randomized trials.
We compare winning and losing firms in lotteries for H-1B visas, matching administrative data on these lotteries to administrative tax data on US firms and to approved US patents. Winning one ...additional H-1B visa crowds out about 1.5 other workers at the firm. Additional H-1Bs have insignificant and at most modest effects on firm innovation. More general evidence from the universe of US firms and the universe of H-1B visas using alternative estimation strategies is consistent with these results. Firms that hire H-1Bs grow faster and innovate more because they are different in other ways from firms that do not.
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10.
The effects of youth employment Gelber, Alexander; Isen, Adam; Kessler, Judd B
The Quarterly journal of economics,
02/2016, Volume:
131, Issue:
1
Journal Article
Peer reviewed
Programs to encourage labor market activity among youth, including public employment programs and wage subsidies like the Work Opportunity Tax Credit, can be supported by three broad rationales. They ...may (i) provide contemporaneous income support to participants; (ii) encourage work experience that improves future employment and/or educational outcomes of participants; and/or (iii) keep participants “out of trouble.” We study randomized lotteries for access to the New York City (NYC) Summer Youth Employment Program (SYEP), the largest summer youth employment program in the United States, by merging SYEP administrative data on 294,100 lottery participants to IRS data on the universe of U.S. tax records; to New York State administrative incarceration data; and to NYC administrative cause of death data. In assessing the three rationales, we find that (i) SYEP participation causes average earnings and the probability of employment to increase in the year of program participation, with modest contemporaneous crowdout of other earnings and employment; (ii) SYEP participation causes a modest decrease in average earnings for three years following the program and has no impact on college enrollment; and (iii) SYEP participation decreases the probability of incarceration and decreases the probability of mortality, which has important and potentially pivotal implications for analyzing the net benefits of the program.
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