| 1. |
- Aronsson, Thomas, 1963-, et al.
(author)
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A maximum likelihood bunching estimator of the elasticity of taxable income
- 2024
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In: Journal of applied econometrics (Chichester, England). - : John Wiley & Sons. - 0883-7252 .- 1099-1255. ; 39:1, s. 200-216
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Journal article (peer-reviewed)abstract
- This paper develops a maximum likelihood (ML) bunching estimator of the elasticity of taxable income (ETI). Our structural approach provides a natural framework to simultaneously account for unobserved preference heterogeneity and optimization errors and for measuring their relative importance. We characterize the conditions under which the parameters of the model are identified and show that the ML estimator performs well in terms of bias and precision. The paper also contains an empirical application using Swedish data, showing that both the ETI and the standard deviation of the optimization friction are precisely estimated, albeit relatively small.
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| 2. |
- Aronsson, Thomas, 1963-, et al.
(author)
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Alternative parametric bunching estimators of the ETI
- 2018
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Reports (other academic/artistic)abstract
- We propose a maximum likelihood (ML) based method to improve the bunching approach of measuring the elasticity of taxable income (ETI), and derive the estimator for several model settings that are prevalent in the literature, such as perfect bunching, bunching with optimization frictions, notches, and heterogeneity in the ETI. We show that the ML estimator is more precise and likely less biased than ad-hoc bunching estimators that are typically used in the literature. In the case of optimization frictions in the form of random shocks to earnings, the ML estimation requires a prior of the average size of such shocks. The results obtained in the presence of a notch can differ substantially from those obtained using ad-hoc approaches. If there is heterogeneity in the ETI, the elasticity of the individuals who bunch exceeds the average elasticity in the population.
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| 3. |
- Aronsson, Thomas, 1963-, et al.
(author)
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Maximum Likelihood Bunching Estimators of the ETI
- 2021
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Reports (other academic/artistic)abstract
- We propose a maximum likelihood method to improve the bunching approach of estimating the elasticity of taxable income (ETI), and derive estimators for several model settings such as bunching with optimization frictions, notches, and heterogeneity in the ETI. Modelling optimization frictions explicitly, our estimators fit the data of several published studies very well. In the presence of a notch, the results can differ substantially from those obtained using the polynomial approach. If there is heterogeneity in the ETI, the elasticity among those who bunch exceeds the average elasticity in the population.
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| 4. |
- Aronsson, Thomas, 1963-, et al.
(author)
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The Quality of the Estimators of the ETI
- 2017
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Reports (other academic/artistic)abstract
- Measuring the elasticity of taxable income (ETI) is central for tax policy design. Yet, there are few arguments which support or infirm that current methods yield measurements of the ETI that can be trusted. Our first purpose is to use simulation methods to assess the bias and precision of the prevalent methods used in the literature (IV estimation and bunching methods). Thereby, we aim at (i) explaining the huge differences in empirical results, and (ii) providing arguments in favor of or against using these methods. Our second purpose is to suggest indirect inference estimation to improve the quality of the measurement. We find that the IV regression estimators may suffer from considerable bias and be quite imprecise, whereas the bunching estimators perform better in our controlled environment. We also show that using more of the information available in the data, estimators based on indirect inference principles produce more precise estimates of the ETI than any of the most commonly used methods.
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| 5. |
- Aronsson, Thomas, 1963-, et al.
(author)
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The quality of the estimators of the ETI
- 2022
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In: Journal of Public Economics. - : Elsevier. - 0047-2727 .- 1879-2316. ; 212
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Journal article (peer-reviewed)abstract
- The elasticity of taxable income (ETI) is a central statistic for tax policy design. One purpose of the present paper is to use Monte Carlo simulation techniques to assess the bias and precision of the prevalent estimators in the literature, the IV-regression estimator and the bunching estimator. Thereby, we aim to provide arguments in favor of, or against, using these methods. Another is to suggest indirect inference estimation to improve the quality of the measurement of the ETI. While IV-regression estimators perform well in terms of bias under certain conditions, they are more variable than bunching estimators. We also find that bunching estimators can be biased downward. The estimators based on indirect inference principles are practically unbiased and more precise than the other estimators.
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| 6. |
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| 7. |
- Bingley, Paul, et al.
(author)
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Employer Pay Policies, Public Transfers and the Retirement Decisions of Men and Women in Denmark
- 2004
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In: European Economic Review. - : Elsevier. - 0014-2921 .- 1873-572X. ; 48:1, s. 181-200
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Journal article (peer-reviewed)abstract
- The empirical retirement literature measures individual responses to variations in income flows due to public transfers, private individual or employer-provided pensions. We estimate a model accounting for the incentive effects from these sources. A dynamic structural model is extended to allow both individual and employer heterogeneity. This is applied to a Danish matched panel of workers and establishments, spanning a period of reforms to a public early retirement programme. Employer-specific compensation is found to be an important determinant of work and retirement income flows. Employer effects on retirement age are only found among sub-samples where access to public transfers is limited.
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| 8. |
- Bingley, Paul, et al.
(author)
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Public pension programmes and the retirement of married couples in Denmark
- 2007
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In: Journal of Public Economics. - : Elsevier. - 0047-2727 .- 1879-2316. ; 91:10, s. 1878-1901
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Journal article (peer-reviewed)abstract
- In this paper we study the economic determinants of the joint retirement process of married couples. We propose a tractable dynamic discrete choice model for retirement decisions which allows for non-trivial saving behaviour. We estimate the model on a 1% sample of Danish couples of potential retirement age drawn from a population-based administrative register. The introduction and subsequent reforms of a publicly financed early retirement programme provide us with variation in the data to insure identification of the parameters of interest: the elasticities of participation/retirement with respect to income flows. Our estimates imply a significant asymmetry in the sensitivity of retirement behaviour of men and women with respect to variation in their own, or their spouse's, income flows.
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| 9. |
- Bingley, Paul, et al.
(author)
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The Incidence of Income Tax on Wages and Labour Supply
- 2002
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In: Journal of Public Economics. - : Elsevier. - 0047-2727 .- 1879-2316. ; 83:2, s. 173-194
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Journal article (peer-reviewed)abstract
- In the simple framework of a static model for equilibrium wages and labour supplies, we show that the incidence of income tax on equilibrium wages can be measured independently from the individual labour supply elasticity. This extends recent work by [Journal of Labour Economics, 15(3) (1997) S72-S101] and [Journal of Public Economics, 65 (1997) 119-145], who estimate tax incidence on earnings, and [Econometrica, 66(4) (1998) 827-861] and [NBER Working Paper 5023 (1995)], who estimate labour supply elasticities, Our measurements are based on a large multi-level longitudinal data set of Danish private sector establishments and workers. We show that, allowing for labour supply response, there is strong evidence for partial shifting of the burden of income tax from worker to employer. Higher marginal tax rates are associated with increases in gross wages and earnings
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| 10. |
- Bäckström, Peter, 1985-
(author)
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Empirical essays on military service and the labour market
- 2023
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Doctoral thesis (other academic/artistic)abstract
- This thesis consists of an introductory part and four self-contained papers that study empirical questions related to military service and the labour market.Paper [I] studies the relationship between civilian labour market conditions and the number of people who volunteer for military service in Sweden. I use panel data on Swedish counties for the years 2011 through 2015 and study the effect of civilian unemployment on the rate of applications from individuals aged 18 to 25 to initiate basic military training. The results indicate a positive and statistically significant relationship between the unemployment rate and the application rate, and suggest that the civilian labour market environment can give rise to non-trivial fluctuations in the supply of volunteers to the Swedish military.Paper [II] studies how local labour market conditions influence the quality composition of those who volunteer for military service in Sweden. I estimate a fixed-effects regression model on a panel data set containing cognitive ability test scores for those who applied for military basic training across Swedish municipalities during the period 2010 to 2016. The main finding is that if civilian employment rates at the local level go up, the average test score of those who volunteer for military service goes down. The results suggest that, due to the way in which different types of individuals select themselves into the military, the negative impact of a strong civilian economy on recruitment volumes is reinforced by a deterioration in recruit quality.Paper [III] studies the effect of peacekeeping on post-deployment earnings for military veterans. Using Swedish administrative data, we follow a sample of more than 11,000 veterans who were deployed for the first time during the period 1993-2010 for up to nine years after returning home. To deal with selection bias, we use difference-in-differences propensity score matching based on a rich set of covariates, including measures of individual ability, health and pre-deployment labour market attachment. We find that, overall, veterans’ post-deployment earnings are largely unaffected by their service. Even though Swedish veterans in the studied period tend to outperform their birth-cohort peers who did not serve, we show that this advantage in earnings disappears once we adjust for non-random selection into service. Paper [IV] studies the relationship between military deployment to Bosnia in the 1990s and adverse outcomes on the labour market. The analysis is based on longitudinal administrative data for a sample of 2275 young Swedish veterans who served as peacekeepers in Bosnia at some point during the years 1993–1999. I follow these veterans for up to 20 years after deployment. Using propensity score matching based on a rich set of covariates, I estimate the effects of deployment on three broad measures of labour market marginalisation: long-term unemployment, work disability, and social-welfare assistance. I find no indication of long-term labour market marginalisation of the veterans. Even though the veterans experienced an increase in the risk of unemployment in the years immediately following return from service, in the long run their attachment to the labour market is not affected negatively by their service.
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