Estimating a Dynamic Model of Household Choices in the Presence of Income Taxation.

The purpose of the article is to study the incentive and distributional consequences of income taxation. The article analyzes tax chances in a dynamic setting. The framework is estimated under a set of different identifying assumptions using parametric, nonparametric, and semiparametric technique. The empirical results focus on tax reforms in Germany in the 1980s. The article shows that these reforms did not significantly lower effective tax rates. The findings also suggest that estimated elasticities for male labor supply are small, between 0.02 and 0.2. Copyright 2000 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.