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Project Citation: 

Ales, Laurence, Kurnaz, Musab, and Sleet, Christopher. Replication data for: Technical Change, Wage Inequality, and Taxes. Nashville, TN: American Economic Association [publisher], 2015. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E112986V1

Project Description

Summary:  View help for Summary This paper considers the normative implications of technical change for tax policy design. A task-to-talent assignment model of the labor market is embedded into an optimal tax problem. Technical change modifies equilibrium wage growth across talents and the substitutability of talents across tasks. The overall optimal policy response is to reduce marginal income taxes on low to middle incomes, while raising those on middle to high incomes. The reform favors those in the middle of the income distribution, reducing their average taxes while lowering transfers to those at the bottom. (JEL D31, H21, H23, H24, J31, O33)

Scope of Project

JEL Classification:  View help for JEL Classification
      D31 Personal Income, Wealth, and Their Distributions
      H21 Taxation and Subsidies: Efficiency; Optimal Taxation
      H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
      H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
      J31 Wage Level and Structure; Wage Differentials
      O33 Technological Change: Choices and Consequences; Diffusion Processes


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