I. Introduction, 307.—II. Utility functions and differences in tastes, 308.—III. Measuring horizontal equity, 313.—IV. Qualifications, 318.

PAYROLL AND PROGRESSIVE INCOME taxes play an enormous role in the American fiscal system. It is therefore of some importance to know the extent to which they influence work incentives. The purpose of this study is to present some econometric evidence on the effects of taxes on married women, a group of growing importance in the American labor force.2 A testable model of labor supply is developed which permits statistical estimation of a coefficient of tax perception. Unlike previous models of labor supply, it allows for the possibility that the wage may depend on the number of hours worked. Contrary to much of the literature, the results of this paper strongly suggest that marginal tax rates do have an important impact on labor force behavior. This section reviews briefly the past thought on this problem. Section 2 develops a model to explain work decisions when an individual faces a whole set of wagehour combinations, rather than a given wage independent of the number of hours he works. In Section 3 this model is modified to permit an explicit test of whether or not taxes affect individuals' labor supply decisions. Estimation problems are discussed at length, and the empirical results are presented. A concluding section contains a summary and suggestions for future research.

THE economic and demographic determinants of the labor force behavior of married females have been studied intensively.' Many of the important variables have now been isolated: education, age, income of husband, number of children, etc. However, as will be discussed below, the existing literature pays insufficient attention to the fact that U.S. income tax laws have placed a large burden on the earnings of married women. When a married couple chooses to enjoy the tax advantages of filing jointly, the first dollar earned by the wife is in effect taxed at the same marginal rate as the last dollar earned by the husband.2 The purpose of this paper is to present some empirical results on the impact of tax rates on the labor supply of married women. Explicit attention is focused on the extent to which individuals react to net rather than gross wages. The evidence strongly supports the view that it is the net wage that matters in the hours of work decision. Section I briefly discusses how taxes have been treated traditionally in the analysis of labor supply. Section II presents a model for examining the impact of taxes on labor supply, and section III contains the results of an empirical test of this model. A concluding section discusses work in progress which will refine and extend the results of this paper.

The excess burden of a tax is the diminution of utility above that which would have occurred had the tax been collected as a lump sum. Usually, excess burden is measured by a method which relies on a second-order approximation to an arbitrary utility function. In this paper, excess burdens are computed using explicit utility functions and the results compared with those obtained from the second-order approximation.

We specify a model of municipal labor demand when resource flows available to the municipality are uncertain. The model allows us to test the hypothesis that employment decisions are rational in the sense that they incorporate all available information at the time that the decisions are made. We find that, for our sample of communities, on the whole one cannot reject the hypothesis that labor demand is consistent with intertemporal utility maximization under uncertainty. However, small and large communities exhibit different behavior. The employment decisions of small communities are consistent with the model, while those of large communities are not.

Jonathan Eaton, Harvey S. Rosen; Optimal Redistributive Taxation and Uncertainty*, The Quarterly Journal of Economics, Volume 95, Issue 2, 1 September 1980, Pag

this paper is to analyze theoretically the effect of taxation on human capital accumulation in a model which explicitly allows for uncertainty

In this paper we examine the factors affecting the structure of executives' compensation packages. We focus particularly on the role of various types of delayed compensation as means of “bonding” executives to their firms. The basic problem is to design a compensation package that rewards actions that are in the long-run interest of the stockholders. Firms must take into account their ability to discern unfortunate circumstances from mismanagement, the extent to which a compensation package forces the executive to face risks beyond his control, and the willingness of a given executive to bear this risk. We use our theory to interpret some executive compensation data from the early 1970s.

MANY COMMODITIES can be viewed as bundles of individual attributes for which no explicit markets exist. It is often of interest to estimate structural demand and supply functions for these attributes, but the absence of directly observable attribute prices poses a problem for such estimation. In an influential paper published several years ago, Rosen [3] proposed an estimation procedure to surmount this problem. This procedure has since been used in a number of applications (see, for example, Harrison and Rubinfeld [2] or Witte, et al. [4]). The purpose of this note is to point out certain pitfalls in Rosen's procedure, which, if ignored, could lead to major identification problems. In Section 2 we summarize briefly the key aspects of Rosen's method as it has been applied in the literature. Section 3 discusses the potential problems inherent in this procedure and provides an example. Section 4 concludes with a few suggestions for future research.