Knowing the elasticity of taxable income (ETI) is crucial for understanding the effects of taxation on taxpayer behavior and consequently on tax revenues. Previous research finds that high-income individuals are the most sensitive to tax policy changes. However, these individuals have more...

There is little internal propagation of unemployment in standard search and matching models. When calibrated to the high levels of worker flows observed empirically, unemployment in these models rapidly converges back to its steady state level. We illustrate that even with high worker flows...