Choice of Occupation, Tax Incidence and Piecemeal Tax Revision.

A model is presented where workers move between two different occupations in response to economic incentives that are distorted by an income tax. Wages assume equilibrium values that are affected by the tax parameters. Incidence and welfare effects of small tax revisions are analyzed with particular attention to the ro le of tax-induced wage changes. It is demonstrated that, within the e conomic setting of the model, such wage effects may be neglected in a ssessments of piecemeal tax revisions. Copyright 1988 by The editors of the Scandinavian Journal of Economics.