American Economic Review Vol. 89 No. 5 1999
Marginal Tax Rates and Income Inequality in a Life-Cycle Model
Abstract
In this paper we study the quantitative impact of marginal tax rates on the distribution of income. Our methodology builds on computable general-equilibrium framework. We find that distortions from marginal tax rate changes of the sort implied by the Tax Reform Act of 1986 have sizable effects on income inequality in a reasonably quantified life-cycle setting: In our model rate changes alone capture half the increase in the pretax Gini that actually occurred between 1984 and 1989.
- DOI
- 10.1257/aer.89.5.1197
- Volume
- 89
- Issue
- 5
- Pages
- 1197-1215
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref