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|Taxation, Wage Variation, and Job Choice|
with : w1284
This paper examines the effect of earnings taxes on the variability of wages over time. We estimate a "hedonic wage locus" which indicates how the market allows individuals to substitute the mean level of the wage for its variability across jobs. Information from this locus is used to estimate the parameters of individuals' indifference curves between the mean and temporal variation of hourly wages. On the basis of these utility function parameters, we predict that lowering the rate of taxation on earnings would on average lead workers to choose jobs with a higher pre-tax mean wage and with greater wage variation.
Published: Brown and Rosen, Journal of Labor Economics, October 1987. citation courtesy of
|Structural Estimation in Implicit Markets|
in The Measurement of Labor Cost, Jack E. Triplett, editor
|How Close to an Auction Is the Labor Market? Employee Risk Aversion, Income Uncertainty, and Optimal Labor Contracts|
Section I of this paper develops a model of income insurance in the labor market. The model differs from those of previous analyses in its focus on quantitative implications regarding the degree to which wages diverge from marginal value products, both in time-series and in cross-section data. Sections II and III present empirical evidence consistent with these implications. The main empirical finding is that of short-term divergence, but long-term equality between wages and marginal value products. The labor market appears to differ from an auction market only in the short run, but this short-run divergence considerably reduces the potential variability of employees' realized wealth.