• Medientyp: E-Book
  • Titel: The Global Life-Cycle Optimizer – Analyzing Fiscal Policy's Potential to Dramatically Distort Labor Supply and Saving
  • Beteiligte: Brumm, Johannes [Verfasser:in]; Kotlikoff, Laurence J. [Verfasser:in]; Krause, Christopher [Verfasser:in]
  • Körperschaft: National Bureau of Economic Research
  • Erschienen: Cambridge, Mass: National Bureau of Economic Research, April 2024
  • Erschienen in: NBER working paper series ; no. w32335
  • Umfang: 1 Online-Ressource; illustrations (black and white)
  • Sprache: Englisch
  • Schlagwörter: Finanzpolitik ; Modellierung ; Lebenszyklus ; Wirkungsanalyse ; Arbeitsangebot ; Konsumentenverhalten ; Sparen ; Theorie ; Taxation, Subsidies, and Revenue ; Fiscal Policies and Behavior of Economic Agents ; General ; Household ; Government Policy; Provision and Effects of Welfare Programs ; Time Allocation and Labor Supply ; Arbeitspapier ; Graue Literatur
  • Reproduktionsnotiz: Hardcopy version available to institutional subscribers
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  • Beschreibung: Fiscal policy in the U.S. and other countries renders intertemporal budgets non-differentiable, nonconvex, and discontinuous. Consequently, assessing work and saving responses to policy requires global optimization. This paper develops the Global Life-Cycle Optimizer (GLO), a stochastic pattern-search algorithm. The GLO robustly, precisely, and quickly locates global optima in highly complex fiscal settings. We use the GLO to study how a stylized U.S. fiscal system distorts workers' labor supply and saving assuming standard preferences. The system incorporates kinks from federal personal income tax brackets, Social Security's FICA tax, and a notch from the provision of basic income below a threshold. The GLO reproduces theoretically predicted earnings bunching and flipping over a remarkably wide range of wage rates. Saving distortions can be equally dramatic. Associated excess burdens range from substantial to massive. Restricting labor supply to full-or part-time work can eliminate flipping when it's optimal and produce flipping when it's suboptimal. Joint filing can significantly reduce the earnings of lower-wage spouses relative to that of higher-wage spouses. The GLO can be applied to assess a country's or state's full set of work and saving disincentives. Consequently, it can facilitate analyses of structural labor supply and tax reform