It takes two to tango: Labour responses to an income tax holiday in Argentina

Autores
Tortarolo, Dario; Cruces, Guillermo Antonio; Castillo, Victoria
Año de publicación
2020
Idioma
inglés
Tipo de recurso
artículo
Estado
versión publicada
Descripción
We exploit a large, quasi-randomized, 2.5-year-long income tax holiday to identify intertemporal labor responses of high-wage earners to net wage changes. In August 2013, the Argentine government exempted a group of wage earners from the income tax for 2.5 years while leaving in place the tax on other high-wage earners. Eligibility was based on whether past wage earnings were below a fixed threshold, thus levying sharply different marginal and average tax rates—effectively 0% for workers below the threshold. Using rich population-wide administrative data and a regression discontinuity design, we estimate a precise and very small wage earnings elasticity of 0.017 for this large, salient, and temporary income tax change. Responses are larger for more flexible outcomes (overtime hours) and for more elastic groups (job switchers and managers). We also find avoidance responses from new entrants who faced no tax if their first monthly wage was below the fixed threshold. This strategic entry below the threshold to dodge taxes required coordination with employers. Our findings indicate rigidities in the labor market that require employer-employee cooperation to be overcome for wage earners to be able to respond to tax changes.
Fil: Tortarolo, Dario. Nottingham University ; Reino Unido
Fil: Cruces, Guillermo Antonio. Nottingham University ; Reino Unido. Universidad Nacional de La Plata. Facultad de Ciencias Económicas. Departamento de Ciencias Económicas. Centro de Estudios Distributivos Laborales y Sociales; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata; Argentina
Fil: Castillo, Victoria. Ministerio de Trabajo, Empleo y Seguridad Social; Argentina
Materia
Labor responde
Income Tax
Argentina
Nivel de accesibilidad
acceso abierto
Condiciones de uso
https://creativecommons.org/licenses/by-nc-sa/2.5/ar/
Repositorio
CONICET Digital (CONICET)
Institución
Consejo Nacional de Investigaciones Científicas y Técnicas
OAI Identificador
oai:ri.conicet.gov.ar:11336/143681

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spelling It takes two to tango: Labour responses to an income tax holiday in ArgentinaTortarolo, DarioCruces, Guillermo AntonioCastillo, VictoriaLabor respondeIncome TaxArgentinahttps://purl.org/becyt/ford/5.2https://purl.org/becyt/ford/5We exploit a large, quasi-randomized, 2.5-year-long income tax holiday to identify intertemporal labor responses of high-wage earners to net wage changes. In August 2013, the Argentine government exempted a group of wage earners from the income tax for 2.5 years while leaving in place the tax on other high-wage earners. Eligibility was based on whether past wage earnings were below a fixed threshold, thus levying sharply different marginal and average tax rates—effectively 0% for workers below the threshold. Using rich population-wide administrative data and a regression discontinuity design, we estimate a precise and very small wage earnings elasticity of 0.017 for this large, salient, and temporary income tax change. Responses are larger for more flexible outcomes (overtime hours) and for more elastic groups (job switchers and managers). We also find avoidance responses from new entrants who faced no tax if their first monthly wage was below the fixed threshold. This strategic entry below the threshold to dodge taxes required coordination with employers. Our findings indicate rigidities in the labor market that require employer-employee cooperation to be overcome for wage earners to be able to respond to tax changes.Fil: Tortarolo, Dario. Nottingham University ; Reino UnidoFil: Cruces, Guillermo Antonio. Nottingham University ; Reino Unido. Universidad Nacional de La Plata. Facultad de Ciencias Económicas. Departamento de Ciencias Económicas. Centro de Estudios Distributivos Laborales y Sociales; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata; ArgentinaFil: Castillo, Victoria. Ministerio de Trabajo, Empleo y Seguridad Social; ArgentinaUniversity of Nottingham. School of Economics and School of Politics and International Relations. Nottingham Interdisciplinary Centre for Economic and Political Research2020-07info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionhttp://purl.org/coar/resource_type/c_6501info:ar-repo/semantics/articuloapplication/pdfapplication/pdfhttp://hdl.handle.net/11336/143681Tortarolo, Dario; Cruces, Guillermo Antonio; Castillo, Victoria; It takes two to tango: Labour responses to an income tax holiday in Argentina; University of Nottingham. School of Economics and School of Politics and International Relations. Nottingham Interdisciplinary Centre for Economic and Political Research; NICEP Working Paper Series; 2020; 7-2020; 1-972397-9771CONICET DigitalCONICETenginfo:eu-repo/semantics/altIdentifier/url/https://www.nottingham.ac.uk/research/groups/nicep/working-papers/2020/nicep-2020-07.aspxinfo:eu-repo/semantics/openAccesshttps://creativecommons.org/licenses/by-nc-sa/2.5/ar/reponame:CONICET Digital (CONICET)instname:Consejo Nacional de Investigaciones Científicas y Técnicas2025-09-29T10:09:37Zoai:ri.conicet.gov.ar:11336/143681instacron:CONICETInstitucionalhttp://ri.conicet.gov.ar/Organismo científico-tecnológicoNo correspondehttp://ri.conicet.gov.ar/oai/requestdasensio@conicet.gov.ar; lcarlino@conicet.gov.arArgentinaNo correspondeNo correspondeNo correspondeopendoar:34982025-09-29 10:09:38.057CONICET Digital (CONICET) - Consejo Nacional de Investigaciones Científicas y Técnicasfalse
dc.title.none.fl_str_mv It takes two to tango: Labour responses to an income tax holiday in Argentina
title It takes two to tango: Labour responses to an income tax holiday in Argentina
spellingShingle It takes two to tango: Labour responses to an income tax holiday in Argentina
Tortarolo, Dario
Labor responde
Income Tax
Argentina
title_short It takes two to tango: Labour responses to an income tax holiday in Argentina
title_full It takes two to tango: Labour responses to an income tax holiday in Argentina
title_fullStr It takes two to tango: Labour responses to an income tax holiday in Argentina
title_full_unstemmed It takes two to tango: Labour responses to an income tax holiday in Argentina
title_sort It takes two to tango: Labour responses to an income tax holiday in Argentina
dc.creator.none.fl_str_mv Tortarolo, Dario
Cruces, Guillermo Antonio
Castillo, Victoria
author Tortarolo, Dario
author_facet Tortarolo, Dario
Cruces, Guillermo Antonio
Castillo, Victoria
author_role author
author2 Cruces, Guillermo Antonio
Castillo, Victoria
author2_role author
author
dc.subject.none.fl_str_mv Labor responde
Income Tax
Argentina
topic Labor responde
Income Tax
Argentina
purl_subject.fl_str_mv https://purl.org/becyt/ford/5.2
https://purl.org/becyt/ford/5
dc.description.none.fl_txt_mv We exploit a large, quasi-randomized, 2.5-year-long income tax holiday to identify intertemporal labor responses of high-wage earners to net wage changes. In August 2013, the Argentine government exempted a group of wage earners from the income tax for 2.5 years while leaving in place the tax on other high-wage earners. Eligibility was based on whether past wage earnings were below a fixed threshold, thus levying sharply different marginal and average tax rates—effectively 0% for workers below the threshold. Using rich population-wide administrative data and a regression discontinuity design, we estimate a precise and very small wage earnings elasticity of 0.017 for this large, salient, and temporary income tax change. Responses are larger for more flexible outcomes (overtime hours) and for more elastic groups (job switchers and managers). We also find avoidance responses from new entrants who faced no tax if their first monthly wage was below the fixed threshold. This strategic entry below the threshold to dodge taxes required coordination with employers. Our findings indicate rigidities in the labor market that require employer-employee cooperation to be overcome for wage earners to be able to respond to tax changes.
Fil: Tortarolo, Dario. Nottingham University ; Reino Unido
Fil: Cruces, Guillermo Antonio. Nottingham University ; Reino Unido. Universidad Nacional de La Plata. Facultad de Ciencias Económicas. Departamento de Ciencias Económicas. Centro de Estudios Distributivos Laborales y Sociales; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata; Argentina
Fil: Castillo, Victoria. Ministerio de Trabajo, Empleo y Seguridad Social; Argentina
description We exploit a large, quasi-randomized, 2.5-year-long income tax holiday to identify intertemporal labor responses of high-wage earners to net wage changes. In August 2013, the Argentine government exempted a group of wage earners from the income tax for 2.5 years while leaving in place the tax on other high-wage earners. Eligibility was based on whether past wage earnings were below a fixed threshold, thus levying sharply different marginal and average tax rates—effectively 0% for workers below the threshold. Using rich population-wide administrative data and a regression discontinuity design, we estimate a precise and very small wage earnings elasticity of 0.017 for this large, salient, and temporary income tax change. Responses are larger for more flexible outcomes (overtime hours) and for more elastic groups (job switchers and managers). We also find avoidance responses from new entrants who faced no tax if their first monthly wage was below the fixed threshold. This strategic entry below the threshold to dodge taxes required coordination with employers. Our findings indicate rigidities in the labor market that require employer-employee cooperation to be overcome for wage earners to be able to respond to tax changes.
publishDate 2020
dc.date.none.fl_str_mv 2020-07
dc.type.none.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
http://purl.org/coar/resource_type/c_6501
info:ar-repo/semantics/articulo
format article
status_str publishedVersion
dc.identifier.none.fl_str_mv http://hdl.handle.net/11336/143681
Tortarolo, Dario; Cruces, Guillermo Antonio; Castillo, Victoria; It takes two to tango: Labour responses to an income tax holiday in Argentina; University of Nottingham. School of Economics and School of Politics and International Relations. Nottingham Interdisciplinary Centre for Economic and Political Research; NICEP Working Paper Series; 2020; 7-2020; 1-97
2397-9771
CONICET Digital
CONICET
url http://hdl.handle.net/11336/143681
identifier_str_mv Tortarolo, Dario; Cruces, Guillermo Antonio; Castillo, Victoria; It takes two to tango: Labour responses to an income tax holiday in Argentina; University of Nottingham. School of Economics and School of Politics and International Relations. Nottingham Interdisciplinary Centre for Economic and Political Research; NICEP Working Paper Series; 2020; 7-2020; 1-97
2397-9771
CONICET Digital
CONICET
dc.language.none.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv info:eu-repo/semantics/altIdentifier/url/https://www.nottingham.ac.uk/research/groups/nicep/working-papers/2020/nicep-2020-07.aspx
dc.rights.none.fl_str_mv info:eu-repo/semantics/openAccess
https://creativecommons.org/licenses/by-nc-sa/2.5/ar/
eu_rights_str_mv openAccess
rights_invalid_str_mv https://creativecommons.org/licenses/by-nc-sa/2.5/ar/
dc.format.none.fl_str_mv application/pdf
application/pdf
dc.publisher.none.fl_str_mv University of Nottingham. School of Economics and School of Politics and International Relations. Nottingham Interdisciplinary Centre for Economic and Political Research
publisher.none.fl_str_mv University of Nottingham. School of Economics and School of Politics and International Relations. Nottingham Interdisciplinary Centre for Economic and Political Research
dc.source.none.fl_str_mv reponame:CONICET Digital (CONICET)
instname:Consejo Nacional de Investigaciones Científicas y Técnicas
reponame_str CONICET Digital (CONICET)
collection CONICET Digital (CONICET)
instname_str Consejo Nacional de Investigaciones Científicas y Técnicas
repository.name.fl_str_mv CONICET Digital (CONICET) - Consejo Nacional de Investigaciones Científicas y Técnicas
repository.mail.fl_str_mv dasensio@conicet.gov.ar; lcarlino@conicet.gov.ar
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