Intertemporal Labor Supply Substitution? Evidence from the Swiss Income Tax Holidays
This paper estimates intertemporal labor supply responses to two-year long income tax holidays staggered across Swiss cantons. Cantons shifted from an income tax system based on the previous two years' income to a standard annual pay as you earn system, leaving two years of income untaxed. We find significant but quantitatively very small responses of wage earnings with an inter-temporal elasticity of .025 overall. High wage income earners and especially the self-employed display larger responses with elasticities around .1 and .25 respectively, most likely driven by tax avoidance. We find no effects along the extensive margin at all.
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Copy CitationIsabel Z. Martinez, Emmanuel Saez, and Michael Siegenthaler, "Intertemporal Labor Supply Substitution? Evidence from the Swiss Income Tax Holidays," NBER Working Paper 24634 (2018), https://doi.org/10.3386/w24634.
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Published Versions
Isabel Z. Martínez & Emmanuel Saez & Michael Siegenthaler, 2021. "Intertemporal Labor Supply Substitution? Evidence from the Swiss Income Tax Holidays," American Economic Review, American Economic Association, vol. 111(2), pages 506-546, February. citation courtesy of 
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