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Estimating Earnings Adjustment Frictions: Method and Evidence from the Social Security Earnings Test / Alexander M. Gelber, Damon Jones, Daniel W. Sacks.
- Format:
- Book
- Author/Creator:
- Gelber, Alexander M.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w19491.
- NBER working paper series no. w19491
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Estimating Earnings Adjustment Frictions
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2013.
- Summary:
- We introduce a method for estimating the cost of adjusting earnings, as well as the earnings elasticity. Our method uses information on bunching in the earnings distribution at convex budget set kinks before and after policy-induced changes in the magnitude of the kinks: the larger is the adjustment cost, the smaller is the absolute change in bunching from before to after the policy change. In the context of the Social Security Earnings Test, our results demonstrate that the short-run impact of changes in the effective marginal tax rate can be substantially attenuated.
- Notes:
- Print version record
- October 2013.
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