Abstract
In this paper’s tournament model, the effect of income taxes on workers’ effort depends on risk preferences. At risk neutrality and low levels of worker risk aversion effort falls with higher taxes, whereas with sufficiently high risk aversion effort increases with tax rises. In the former, firms respond to higher taxes by reducing the wage spread and increasing it in the latter. It sheds light on why top earners’ income has risen with tax reductions over the last five decades. With females being more risk averse it suggests tax reductions contribute to the CEO gender pay gap.
Original language | English |
---|---|
Pages (from-to) | 834-845 |
Number of pages | 12 |
Journal | Oxford Economic Papers |
Volume | 69 |
Issue number | 3 |
Early online date | 4 Oct 2016 |
DOIs | |
Publication status | Published - Jul 2017 |
Bibliographical note
AcknowledgementsI would like to thank two anonymous referees for their constructive comments. Any remaining errors are my own.
Keywords
- J01
- H31
Fingerprint
Dive into the research topics of 'Taxation, risk aversion, and the wage gaps in tournaments'. Together they form a unique fingerprint.Profiles
-
John Skatun
- Business School, Business Management - Head of School
- Business School, Economics - Chair in Economics
- Business School, Centre for Labour Market Research (CeLMR)
Person: Academic