Tax Liability Side Equivalence in Gift-Exchange Labor Markets

Arbeitspapier

Tax Liability Side Equivalence (tax LSE) claims that the statutory incidence of a tax is irrelevant for its economic incidence. In gift-exchange labor markets, firms provide a gift to workers by paying high wages, and workers reciprocate by providing high efforts. Tax LSE is theoretically predicted to hold in gift-exchange markets if workers' effort choices exclusively depend on the net wage, but breaks down if they partially depend on the gross wage paid to workers. We experimentally test tax LSE in a gift-exchange market and find that it holds surprisingly well.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. 03-065/1

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Group Behavior ; Taxation and Subsidies: Incidence ; Labor Contracts
• Subject: Tax incidence ; Efficiency wages ; Gift exchange ; Experiments ; Steuerinzidenz ; Effizienzlohn ; Geschenk ; Test ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Riedl, Arno ; Tyran, Jean-Robert
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/85761
• Last update: 10.03.2025, 11:41 AM CET