Marginal Net Taxation of Americans’ Labor Supply

Altig, David; Auerbach, Alan J.; Kotlikoff, Laurence J.; Ilin, Elias; Ye, Victor

doi:10.2139/ssrn.3603794

Cited by 3 publications

(7 citation statements)

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“…For nursing home aides who experienced "job lock," Medicaid potentially loosens the "job lock" and allows them to have more flexibility in work schedules (e.g., fulltime to part-time) and job choices. However, as an incomebased program, Medicaid can disincentivize work for those who would like to earn more income (Altig et al, 2020). To meet the income eligibility criteria of Medicaid, nursing home aides might work fewer hours and/or accept lower wages.…”

Section: Discussionmentioning

confidence: 99%

Effect of Medicaid Expansion on Health Insurance for Low-Income Nursing Home Aides

Sharma

2022

J Appl Gerontol

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We examine how the Affordable Care Act Medicaid expansion affected the insurance coverage and the sources of coverage among low-income nursing home aides using the 2010–2019 American Community Survey data. Insurance coverage for low-income nursing home aides increased from about 60% to nearly 90% in expansion states but rose to only about 80% in nonexpansion states. Using a difference-in-differences regression design, we find that Medicaid expansion was associated with a 5.1 percentage-point increase in overall insurance coverage. Expansion states had a 12.2 percentage-point gain in Medicaid that was partially offset by a 6.4 percentage-point reduction in private insurance coverage. Our results show that ACA Medicaid expansion increased insurance coverage for low-income nursing home aides; however, there was substantial crowd-out of private insurance coverage in this population. Policymakers should consider expanding Medicaid while incentivizing affordable private health insurance options for low-income nursing home aides to improve insurance coverage.

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Section: Discussionmentioning

confidence: 99%

Effect of Medicaid Expansion on Health Insurance for Low-Income Nursing Home Aides

Sharma

2022

J Appl Gerontol

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“…Third, we use recent U.S. microeconomic data in Auerbach et al (2016) and Altig et al (2020) to calibrate our model's initial U.S. age-skill asset distribution, the progressivity of the U.S. tax system, and the skill distribution of U.S. Social Security benefits. We assume the model's other regions have the same initial age/skill asset distribution as the U.S., the U.S. degree of tax progressivity, and the U.S. skill distribution of state pensions.…”

Section: Previous Computable General Equilibrium Modelsmentioning

confidence: 99%

“…Region-specific macro and government fiscal targets are obtained from a number of data sources. 10 We use the microeconomic estimates of and Altig et al (2020) to calibrate, respectively, ϕ K , and the 2019 progressivity of the U.S. federal income tax. We assume all regions maintain this degree of income-tax progressivity through time.…”

Section: Calibrationmentioning

confidence: 99%

“…The target for this ratio is the ratio between the METR of the top 4 percent of households by labor earning (i.e. high-skilled households) and the average effective tax rate of U.S. households as estimated by Altig et al (2020) and Auerbach et al (2016). This ratio, approximately 1.72, is set as the income tax progressivity target for all regions.…”

Section: A Calibration Detailsmentioning

confidence: 99%

“…Agents comprise three skill groups -high, middle, and low -that are more or less abundant depending on the region. The model has 464 demographic, fiscal, preference, and technology parameters, each of which is precisely calibrated using UN, IMF, and other macro data as well as micro findings from , Altig et al (2020), Auerbach et al (2016).…”

Section: Introductionmentioning

confidence: 99%

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Simulating Endogenous Global Automation

Benzell¹,

Kotlikoff²,

LaGarda³

et al. 2021

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Comparing our baseline transition to a future without automation identifies winners and losers. Western Europe, Japan, Canada, the UK, and the U.S. experience the largest percentage increases in GDP. Compared to no-automation, output in 2050 is, respectively, 12.9, 12.7, 12.1, 10.0, and 5.1 percent larger. China defers automating until 2027. Automation makes slow-or non-automating regions, including India, Brazil, and Sub-Saharan Africa, worse off. This reflects the flow of capital from non-automating to automating regions. Mexico, for example, produces 3.6 percent less output in 2050 due to a 9.2 percent decline in the amount of capital that can profitably operate in that region.We also consider alternate scenarios where access to new technologies is restricted to the U.S., where automation technologies reduce labor input-shares of all skill groups proportionally, and where technological change is more rapid than historical experience. In virtually all cases, automation benefits the U.S. and raises the welfare of middle-and high-skilled American workers. As indicated, relative to no automation, U.S. GDP in 2050 increases by 5.1 percent in our baseline scenario. This figure is 8.3 percent if the new technology is exclusive to the U.S., 6.1 percent if the new technology is not skill-biased, and 11.9 percent if global technological change occurs at twice the historical rate.As suggested by stylized models (e.g. Benzell et al. 2016;Sachs et al. 2015a;Acemoglu and Restrepo 2018a;Peretto and Seater 2013), automation increases the world interest rate. However, this effect is relatively modest in our model and does not significantly deter countries from automating. Absent automation, the global interest rate falls from 6.0 percent in 2017 to 2.8 in 2050. In our baseline scenario, the 2050 interest rate decreases by less -to 3.2 percent. Two fundamental trends contribute to a global savings glut (Eichengreen, 2015). The first is population aging in developed and many emerging regions that raises global wealth per worker. The second is the high saving rate of Chinese and Indian households coupled with their rising share of world GDP.Wage inequality increases dramatically in our baseline scenario. In the U.S, for example, the high-skilled wage increases by 28.8 percent between 2017 and 2050. The low-skilled wage falls by 22.8 percent. In 2050, 92.5 percent of the world's high-skilled workers are better off due to automation. But 85.7 percent of low-skilled workers and 71.5 percent of all workers are worse off. In the same year and relative to no-automation, the world's average worker is 0.9 percent worse off in terms of lifetime welfare, measured as a compensating differential. Our paper's final section considers policy responses. One example is mandating automation in regions that would not otherwise automate. Such 'forced industrialization' policies (see, for example, Preobrazhensky 1926; Erlich 1950) have been pursued historically by the Soviet Union and other countries. In India, but no other region, forced adoption ra...

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Untitled

2023

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The structure of the United States social safety net features phaseouts of public assistance as household income increases, which can function as an effective marginal tax on wage gains, commonly referred to as a "benefits cliff." These so-called benefits cliffs create a disincentive for low-income workers, especially those with children, to accept higher-paying jobs or promotions. This paper describes how benefits cliffs can affect the financial resources of a single adult, one child family living in the District of Columbia (DC) and introduces the DC Career Mobility Action Plan (Career MAP) pilot program, which serves as a benefits cliff mitigation strategy for participants. Key findings:• Due to the co-occurring phaseouts of multiple transfer programs, or benefits cliffs, a hypothetical single adult, one child (aged three) family living in DC would receive no financial gain from a wage increase between $11,000 and $65,000 of earned income. • Prior to program enrollment in DC's benefits cliff mitigation pilot (Career MAP), the financial disincentives presented by benefits cliffs and high effective marginal tax rates are most pronounced for families with incomes between 50-150 percent and 325-349 percent of the Federal Poverty Level. • When DC's pilot Career MAP's benefits cliff mitigation strategies are implemented, median effective marginal tax rates decrease for program participants across all income levels. Takeaways for practice:The analysis shows that a Hold Harmless Fund (HHF) provision for four major social safety net programs-Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), childcare subsidies, and public health care-considerably reduces effective marginal tax rates compared to the status quo, keeping them below 100 percent and helping families avoid experiencing benefits cliffs. While our analysis showsThe Federal Reserve Bank of Atlanta's Community & Economic Development (CED) Discussion Paper Series addresses emerging and critical issues in community development. Our goal is to provide information on topics that will be useful to the many actors involved in community development-governments, nonprofits, financial institutions, and beneficiaries. Find more research, use data tools, and sign up for email updates at atlantafed.org/commdev.

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Marginal Net Taxation of Americans’ Labor Supply

Cited by 3 publications

References 0 publications

Effect of Medicaid Expansion on Health Insurance for Low-Income Nursing Home Aides

Effect of Medicaid Expansion on Health Insurance for Low-Income Nursing Home Aides

Simulating Endogenous Global Automation

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