The Non‐Equivalence of Labour Market Taxes: A Real‐Effort Experiment
Journal
Economic Journal
ISSN
0013-0133
Type
journal article
Date Issued
2017-09-01
Author(s)
Abstract
Under full rationality, a labour market tax levied on employers and a corresponding income tax levied on employees are equivalent. With boundedly rational agents, this equivalence is no longer obvious. In a real‐effort experiment, we study the effects of these taxes on preferences concerning the size of the public sector, subjective well‐being, labour supply and on‐the‐job performance. Our findings suggest that employer‐side taxes induce preferences for a larger public sector. Subjective well‐being is higher under employer‐side taxes while labour supply is lower, at least at the extensive margin. We discuss three mechanisms that may underlie these results.
Language
English
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Blackwell
Volume
127
Number
604
Start page
2187
End page
2215
Pages
29
Subject(s)
Contact Email Address
matthias.weber@unisg.ch
Eprints ID
260497
File(s)![Thumbnail Image]()
open.access
Name
Weber Schram EJ accepted version with online appendix.pdf
Size
890.25 KB
Format
Adobe PDF
Checksum (MD5)
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