Income taxes distort the relationship between wages and nontaxable amenities. When the marginal tax rate increases, amenities become more valuable as the compensating differential for low-amenity jobs is taxed away. While there is evidence that the provision of amenities responds to taxes, the literature has ignored the consequences for job…

This paper extends a standard intertemporal labor supply model to account for progressive taxation as well as the joint determination of hourly wages and hours worked. We show that these two factors can have implications for both estimating labor supply elasticities as well as for using these elasticities in tax analysis. Failure to account for…

In the 1990s, many states liberalized statutory rules regarding the tax treatment of earned and unearned income for welfare program eligibility and benefit levels. I use quality control data from the AFDC/TANF program over 1983-2002 to document changes in the corresponding effective tax rates and benefit guarantees. After welfare reform I find…

Unlike American proposals for welfare reform which are concerned primarily with reducing costs by altering work behavior among present recipients of public assistance, British attempts to devise an income transfer system are based on the rationale that scarce resources should be concentrated upon those in the greatest need. (Editor)