| Chapter 1 examines the impact of taxation on family labor supply and test economic models of the family by analyzing responses to the Tax Reform of 1991 in Sweden, known as the "tax reform of the century" because of its large magnitude. Using detailed administrative panel data on approximately 11% of the married Swedish population, I find that husbands and wives react substantially to their own marginal tax rates and to their spouses' rates. The estimates imply that husbands' leisure and wives' leisure are complements in the full sample. I test and reject a set of models in which the family maximizes a single utility function. The standard econometric labor supply specification, in which one spouse reacts to the other spouse's income as if it were unearned income, yields biased coefficient estimates. Uncompensated labor supply elasticities are over-estimated by a factor of more than three, and income effects are of the wrong sign.;Chapter 2 examines a major unresolved issue: How 401(k) eligibility affects saving. I address this question by exploiting a plausibly exogenous change in 401(k) eligibility: Some individuals are ineligible for their firm's 401(k) plan when they begin to work at the firm, but become eligible when they have worked at the firm long enough. I find that 401(k) eligibility raises saving in the 401(k) substantially, but I find no evidence that 401(k) saving is offset by decreases in other financial assets. I also find no evidence that increases in saving following 401(k) eligibility are driven by intertemporal subsitution. In response to 401(k) eligibility, accumulation of durable goods decreases significantly.;Chapter 3 examines the supply elasticity of military enlistments with respect to military pay. To estimate this elasticity, I introduce two new approaches that rely on very different sources of variation but yield similar answers. First, I instrument for the military wage, which is potentially endogenous to recruiting conditions, using the statutory formula that usually governs increases in the military wage. Second, I instrument for civilian earnings using exogenous shocks to national industrial employment interacted with state industrial composition. These approaches show supply elasticities centering around 1.5. |
