IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/1284.html
   My bibliography  Save this paper

Taxation, Wage Variation, and Job Choice

Author

Listed:
  • James N. Brown
  • Harvey S. Rosen

Abstract

This paper examines the effect of earnings taxes on the variability of wages over time. We estimate a "hedonic wage locus" which indicates how the market allows individuals to substitute the mean level of the wage for its variability across jobs. Information from this locus is used to estimate the parameters of individuals' indifference curves between the mean and temporal variation of hourly wages. On the basis of these utility function parameters, we predict that lowering the rate of taxation on earnings would on average lead workers to choose jobs with a higher pre-tax mean wage and with greater wage variation.

Suggested Citation

  • James N. Brown & Harvey S. Rosen, 1984. "Taxation, Wage Variation, and Job Choice," NBER Working Papers 1284, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:1284
    Note: PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w1284.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. John M. Abowd & Orley Ashenfelter, 1980. "Anticipated Unemployment, Temporary Layoffs and Compensating Wage Differentials," Working Papers 517, Princeton University, Department of Economics, Industrial Relations Section..
    2. repec:pri:indrel:dsp01fx719m450 is not listed on IDEAS
    3. Mincer, Jacob, 1970. "The Distribution of Labor Incomes: A Survey with Special Reference to the Human Capital Approach," Journal of Economic Literature, American Economic Association, vol. 8(1), pages 1-26, March.
    4. Heckman, James J & Willis, Robert J, 1977. "A Beta-logistic Model for the Analysis of Sequential Labor Force Participation by Married Women," Journal of Political Economy, University of Chicago Press, vol. 85(1), pages 27-58, February.
    5. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    6. Weiss, Yoram, 1972. "The Risk Element in Occupational and Educational Choices," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1203-1213, Nov.-Dec..
    7. MaCurdy, Thomas E, 1981. "An Empirical Model of Labor Supply in a Life-Cycle Setting," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1059-1085, December.
    8. Hall, Robert E, 1982. "The Importance of Lifetime Jobs in the U.S. Economy," American Economic Review, American Economic Association, vol. 72(4), pages 716-724, September.
    9. Johnson, William R, 1980. "The Effect of a Negative Income Tax on Risk-Taking in the Labor Market," Economic Inquiry, Western Economic Association International, vol. 18(3), pages 395-407, July.
    10. John M. Abowd & Orley C. Ashenfelter, 1981. "Anticipated Unemployment, Temporary Layoffs, and Compensating Wage Differentials," NBER Chapters, in: Studies in Labor Markets, pages 141-170, National Bureau of Economic Research, Inc.
    11. repec:fth:prinin:137 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sarah Brown & Aurora Ortiz‐Nuñez & Karl Taylor, 2012. "Parental Risk Attitudes and Children's Academic Test Scores: Evidence from the US P anel S tudy of I ncome D ynamics," Scottish Journal of Political Economy, Scottish Economic Society, vol. 59(1), pages 47-70, February.
    2. Shaw, Kathryn L, 1996. "An Empirical Analysis of Risk Aversion and Income Growth," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 626-653, October.
    3. Sarah Brown & Karl Taylor, 2006. "Education, Risk Preference and Wages," Working Papers 2006002, The University of Sheffield, Department of Economics, revised Feb 2006.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:eee:labchp:v:1:y:1986:i:c:p:525-602 is not listed on IDEAS
    2. repec:eee:labchp:v:1:y:1986:i:c:p:641-692 is not listed on IDEAS
    3. Rosen, Sherwin, 1985. "Implicit Contracts: A Survey," Journal of Economic Literature, American Economic Association, vol. 23(3), pages 1144-1175, September.
    4. Shaw, Kathryn L, 1996. "An Empirical Analysis of Risk Aversion and Income Growth," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 626-653, October.
    5. repec:eee:labchp:v:2:y:1986:i:c:p:789-848 is not listed on IDEAS
    6. Abowd, John M & Card, David, 1987. "Intertemporal Labor Supply and Long-term Employment Contracts," American Economic Review, American Economic Association, vol. 77(1), pages 50-68, March.
    7. repec:eee:labchp:v:1:y:1986:i:c:p:387-423 is not listed on IDEAS
    8. Emilia Del Bono & Andrea Weber, 2008. "Do Wages Compensate for Anticipated Working Time Restrictions? Evidence from Seasonal Employment in Austria," Journal of Labor Economics, University of Chicago Press, vol. 26(1), pages 181-221.
    9. Robert E. Hall, 1988. "Substitution over Time in Work and Consumption," NBER Working Papers 2789, National Bureau of Economic Research, Inc.
    10. Rosen, Sherwin, 1983. "Unemployment and insurance," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 19(1), pages 5-49, January.
    11. Abowd, John M & Card, David, 1989. "On the Covariance Structure of Earnings and Hours Changes," Econometrica, Econometric Society, vol. 57(2), pages 411-445, March.
    12. Papp, Bence, 2015. "A munkaerő-piaci bizonytalanság hatása a közszféra és a versenyszféra közötti bérkülönbségekre [The effect of labour-market uncertainty on the public/private wage gap]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 473-501.
    13. repec:eee:labchp:v:1:y:1986:i:c:p:3-102 is not listed on IDEAS
    14. Joseph G. Altonji & Christina H. Paxson, 1990. "Labor Supply, Hours Constraints and Job Mobility," Working Papers 651, Princeton University, Department of Economics, Industrial Relations Section..
    15. Florian S. Peters & Alexander F. Wagner, 2014. "The Executive Turnover Risk Premium," Journal of Finance, American Finance Association, vol. 69(4), pages 1529-1563, August.
    16. Elliott, Robert F. & Sandy, Robert, 1998. "Adam Smith may have been right after all: A new approach to the analysis of compensating differentials," Economics Letters, Elsevier, vol. 59(1), pages 127-131, April.
    17. Christiansen, Charlotte & Nielsen, Helena Skyt, 2002. "The Educational Asset Market: A Finance Perspective on Human Capital Investment," Working Papers 02-10, University of Aarhus, Aarhus School of Business, Department of Economics.
    18. Kim, Hyunseob, 2020. "How does labor market size affect firm capital structure? Evidence from large plant openings," Journal of Financial Economics, Elsevier, vol. 138(1), pages 277-294.
    19. Pinheiro, Roberto & Visschers, Ludo, 2015. "Unemployment risk and wage differentials," Journal of Economic Theory, Elsevier, vol. 157(C), pages 397-424.
    20. Mora Rodriguez, Jhon James, 2013. "Introduccion a la teoría del consumidor [Introduction to Consumer Theory]," MPRA Paper 48129, University Library of Munich, Germany, revised 08 Jul 2013.
    21. Wei, Chunyan & Hu, Shiyang & Chen, Feng, 2020. "Do political connection disruptions increase labor costs in a government-dominated market? Evidence from publicly listed companies in China," Journal of Corporate Finance, Elsevier, vol. 62(C).
    22. Joseph G. Altonji & Christina H. Paxson, 1992. "Labor Supply, Hours Constraints, and Job Mobility," Journal of Human Resources, University of Wisconsin Press, vol. 27(2), pages 256-278.
    23. Carlier, G. & Gaumont, D., 2002. "A note on wage differentials, fixed-wages and adverse selection," Economics Letters, Elsevier, vol. 77(3), pages 349-356, November.
    24. Josefa Ramoni Perazzi, 2007. "The compensating differential principle in the public and private sector: A multivariate statistical analysis approach," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 32(24), pages 95-112, july-dece.
    25. Michael P. Keane, 2011. "Labor Supply and Taxes: A Survey," Journal of Economic Literature, American Economic Association, vol. 49(4), pages 961-1075, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:1284. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.