Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/101854
Authors: 
Carpenter, Jeffrey P.
Matthews, Peter Hans
Tabb, Benjamin
Year of Publication: 
2014
Series/Report no.: 
IZA Discussion Papers 8369
Abstract: 
Not enough is known about the responsiveness of individuals, in particular those who tend to work under different incentives, to changes in marginal tax rates. We ask whether changes in marginal tax rates are less distortionary for workers engaged in a contest. To examine this potential rationale for a more progressive tax code, we first model the effort decisions of workers faced with progressive taxation under tournaments and piece rates. Because of the difficulty identifying any distortion that may be induced by the tax code in naturally occurring data, we then report on the results of a real-effort experiment based on this model. Consistent with a behavioral approach to public finance, we find that tournament workers are less sensitive, and conclude with a tentative evaluation of the welfare benefits of progressive taxation in tournament economies.
Subjects: 
taxation
tournaments
public good
real effort experiment
JEL: 
H20
H41
J22
J33
C91
Document Type: 
Working Paper

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