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1. Consumption Insurance against Wage Risk: Family Labor Supply and Optimal Progressive Income Taxation

   https://doi.org/10.1257/mac.20180125  

   Wu, Chunzan; Krueger, Dirk (January 2021, American Economic Journal: Macroeconomics)

   null (Ed.)

   We show that a calibrated life cycle two-earner household model with endogenous labor supply can rationalize the extent of consumption insurance against shocks to male and female wages, as estimated empirically by Blundell, Pistaferri, and Saporta-Eksten (2016) in US data. In the model, 35 percent of male and 18 percent of female permanent wage shocks pass through to consumption, compared to the empirical estimates of 32 percent and 19 percent. Most of the consumption insurance against permanent male wage shocks is provided through the presence and labor supply response of the female earner. Abstracting from this private intrahousehold income insurance mechanism strongly biases upward the welfare losses from idiosyncratic wage risk as well as the desired extent of public insurance through progressive income taxation. Relative to the standard one-earner life cycle model, the optimal degree of tax progressivity is significantly lower and the welfare gains from implementing the optimal system are cut roughly in half. (JEL D15, H21, H24, J16, J22, J31) 

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2. Tax Administration versus Tax Rates: Evidence from Corporate Taxation in Indonesia

   https://doi.org/10.1257/aer.20201237  

   Basri, M. Chatib; Felix, Mayara; Hanna, Rema; Olken, Benjamin A. (December 2021, American Economic Review)

   We compare two approaches to increasing tax revenue: tax administration and tax rates. We show that when Indonesia moved top regional firms into “medium taxpayer offices,” with high staff-to-taxpayer ratios, tax revenue more than doubled. Examining nonlinear changes to corporate income tax rates, we estimate an elasticity of taxable income of 0.579. Combining these estimates, improved tax administration is equivalent to raising top rates on all firms by 8 percentage points. On net, improved tax administration can have significant returns for developing countries. (JEL H25, H26, K34, O17) 

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3. Lessons from the Biggest Business Tax Cut in US History

   https://doi.org/10.1257/jep.38.3.61  

   Chodorow-Reich, Gabriel; Zidar, Owen; Zwick, Eric (August 2024, Journal of Economic Perspectives)

   Williams, Heidi (Ed.)

   We assess the business provisions of the 2017 Tax Cuts and Jobs Act, the biggest corporate tax cut in US history. We draw five lessons. First, corporate tax revenue fell by 40 percent due to the lower rate and more generous expensing. Second, firms with larger declines in their effective tax wedge increased investment relatively more. In aggregate, we suggest a loose consensus from the literature that total tangible corporate investment increased by 11 percent. Third, the business tax provisions increased economic growth and wages by less than advertised by the Act’s proponents, with long-run GDP higher by less than 1 percent and labor income by less than $1,000 per employee. Fourth, provisions that increase foreign investment by US-based multinationals also boost their domestic operations. Fifth, some of the expired and expiring provisions, such as accelerated depreciation, generate more investment per dollar of tax revenue than others. 

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4. Labor Market Power

   https://doi.org/10.1257/aer.20191521  

   Berger, David; Herkenhoff, Kyle; Mongey, Simon (April 2022, American Economic Review)

   We develop, estimate, and test a tractable general equilibrium model of oligopsony with differentiated jobs and concentrated labor markets. We estimate key model parameters by matching new evidence on the relationship between firms’ local labor market share and their employment and wage responses to state corporate tax changes. The model quantitatively replicates quasi-experimental evidence on imperfect productivity-wage pass-through and strategic wage setting of dominant employers. Relative to the efficient allocation, welfare losses from labor market power are 7.6 percent, while output is 20.9 percent lower. Lastly, declining local concentration added 4 percentage points to labor’s share of income between 1977 and 2013. (JEL E25, H71, J24, J31, J42, R23) 

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5. Quantitative analyses of wealth inequality at Classic period El Pilar: The Gini index and labor investment

   https://doi.org/10.1017/S0956536123000081  

   Horn, Sherman; Tran, Justin; Ford, Anabel (January 2023, Ancient Mesoamerica)

   Abstract Survey teams at the El Pilar Archaeological Reserve for Maya Flora and Fauna have mapped 70 percent of its 20 km²area and revealed the extent of settlement around the city center. Large-scale civic architecture, and the distribution of smaller ceremonial groups and minor centers, reflect the wealth and power of Maya rulers presiding over the largest Classic period city in the upper Belize River area. Previous analyses suggest disparities in wealth at El Pilar were more nuanced than the elite/commoner dichotomy commonly invoked for Classic Maya society. This article works to understand wealth inequality at ancient El Pilar by computing Gini coefficients from areal and volumetric calculations of primary residential units—the class of settlement remains most likely to represent ancient households. Presentation of Gini coefficients and their potential interpretations follows a discussion of settlement classification and residential group labor investment. We conclude by contextualizing these results within prior settlement pattern analyses to explore how disparities in wealth may have been distributed across the physical and social landscape. 

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