Chapter

Introduction

Casey B. Mulligan

in The Redistribution Recession

Published in print November 2012 | ISBN: 9780199942213
Published online January 2013 | e-ISBN: 9780199980772 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199942213.003.0001
Introduction

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To help understand the causes of the recession and slow recovery, Chapter 1 advocates a residual analysis: estimation of what would have happened to work hours and other major economic variables if productivity, willingness to work, labor income tax rates, and labor market regulations had remained constant. The residual labor decline that remains after correcting for labor market fundamentals, and therefore the amount and dynamics of the labor decline that might be attributed to impulses outside the labor market, is expected to be different from the total labor decline because the labor market fundamentals were not constant after 2007. The federal minimum wage was hiked three times. “Baby boomers” began reaching retirement age, but many with less wealth than anticipated. Most important, marginal labor income tax rates increased. The chapter outlines the book as it quantifies marginal tax rates and other labor market fundamentals and their consequences for the economy.

Keywords: labor market; marginal tax rates; 2008–9 recession

Chapter.  3420 words.  Illustrated.

Subjects: Public Economics

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