uu.seUppsala University Publications
Change search
ReferencesLink to record
Permanent link

Direct link
The Taxable Income Elasticity: A Structural Differencing Approach
Research Department, Federal Reserve Bank of Dallas.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics, Uppsala Center for Fiscal Studies.
2015 (English)Report (Other academic)
Abstract [en]

We extend a standard taxable income model with its typical functional-form assumptions to account for nonlinear budget sets. We propose a new method to estimate a taxable income elasticity that is more policy relevant than the typically estimated elasticity based on linearized budget sets. Using U.S. data from the NBER tax panel for 1979-1990 and differencing methods, we estimate an elasticity of 0.75 for taxable income and 0.20 for broad income. These estimates are higher than those obtained by specifications based on linearization. Our approach offers a new way to address the problem of endogenous observed marginal tax rates.

Place, publisher, year, edition, pages
Uppsala, 2015. , 21 p.
Working paper / Uppsala Center for Fiscal Studies, Uppsala University, 2015:1
Keyword [en]
taxable income, nonlinear budget sets, panel data
National Category
Research subject
URN: urn:nbn:se:uu:diva-242144OAI: oai:DiVA.org:uu-242144DiVA: diva2:782509
Available from: 2015-01-21 Created: 2015-01-21 Last updated: 2015-01-23Bibliographically approved

Open Access in DiVA

fulltext(376 kB)117 downloads
File information
File name FULLTEXT01.pdfFile size 376 kBChecksum SHA-512
Type fulltextMimetype application/pdf

Search in DiVA

By author/editor
Kumar, AnilLiang, Che-Yuan
By organisation
Uppsala Center for Fiscal Studies

Search outside of DiVA

GoogleGoogle Scholar
Total: 117 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

Total: 445 hits
ReferencesLink to record
Permanent link

Direct link