State and Local Taxes and Employment Wage Level

Economists have devoted much attention to understanding the effects of state-local fiscal polices, particularly taxes, on the growth of state-level employment. However, no one has investigated whether the effects differ by wage level. Using a state-level panel data set, we investigate the link between state-local taxes and the growth of employment for three wage-level categories. We find weak evidence supporting the proposition that the response of employment growth to changes in taxes differ by wage level