Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/265163 
Year of Publication: 
2022
Series/Report no.: 
Working Paper No. 2022:12
Publisher: 
Institute for Evaluation of Labour Market and Education Policy (IFAU), Uppsala
Abstract: 
We exploit a recent Swedish tax reform, implying higher marginal tax rates for the top 5% of the earnings distribution, to learn about earnings responses in an economy where taxes already are high. Using a simple and graphical cross sectional method, we estimate earnings elasticities in the range 0.13-0.16. We interpret the response using a simulation model in which people face uncertain marginal tax rates due to earnings dynamics. The tax response is surprisingly sharp given the earnings variability at the top of the earnings distribution.
Subjects: 
Earnings supply
Income taxation
JEL: 
H24
J22
Document Type: 
Working Paper

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