Tournaments, Risk Aversion and Taxation

Research output: Working paperDiscussion paper

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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 sufficient risk aversion effort increases in response to tax rises. In the former case, firms respond to higher taxes by reducing the wage spread and by increasing it in the latter case. 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 languageEnglish
Place of PublicationAberdeen
PublisherUniversity of Aberdeen Business School
Number of pages32
Publication statusPublished - Apr 2016

Publication series

NameDiscussion Paper in Economics
PublisherUniversity of Aberdeen
No.6
Volume16
ISSN (Electronic)0143-4543

Fingerprint

Taxation
Tax
Risk aversion
Tournament
Workers
Income
Risk neutrality
Gender pay gap
Risk-averse
Chief executive officer
Risk preferences
Income tax
Wages

Keywords

  • Tournaments
  • taxes
  • risk-aversion
  • CEO pay

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

Skatun, J. D. F. (2016). Tournaments, Risk Aversion and Taxation. (Discussion Paper in Economics; Vol. 16, No. 6). Aberdeen: University of Aberdeen Business School.

Tournaments, Risk Aversion and Taxation. / Skatun, John Douglas Fordyce.

Aberdeen : University of Aberdeen Business School, 2016. (Discussion Paper in Economics; Vol. 16, No. 6).

Research output: Working paperDiscussion paper

Skatun, JDF 2016 'Tournaments, Risk Aversion and Taxation' Discussion Paper in Economics, no. 6, vol. 16, University of Aberdeen Business School, Aberdeen.
Skatun JDF. Tournaments, Risk Aversion and Taxation. Aberdeen: University of Aberdeen Business School. 2016 Apr. (Discussion Paper in Economics; 6).
Skatun, John Douglas Fordyce. / Tournaments, Risk Aversion and Taxation. Aberdeen : University of Aberdeen Business School, 2016. (Discussion Paper in Economics; 6).
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