Three essays on the effect of taxes and tax reform on life-cycle labor supply

Understanding the extent to which labor supply is substitutable over time and the degree to which income taxes discourage work continue to be major areas of interest to economists and policy makers. My dissertation attempts to synthesize and extend the taxation and life-cycle labor-supply literatures by examining life-cycle labor-supply behavior when the individual faces a pooled nonlinear wage and interest income tax.;In the first essay I specify and estimate a two-stage structural labor supply model where the first stage estimates the current period wage and wealth effects from a linear labor supply equation conditioned on the asset position at the beginning and end of the period. The second stage estimates the intertemporal preference parameters, conditional on the estimated intratemporal preferences, from an Euler equation governing the marginal utility of net wealth. Using data from the Panel Study of Income Dynamics on prime-aged men for the years 1978-1987 the results from the first essay produce an intratemporal marginal tax elasticity of ;In the second essay I test for structural change in life-cycle labor supply after the passage of the Economic Recovery Tax Act of 1981 and the Tax Reform Act of 1986 using a likelihood ratio test and an out-of-sample predictive test. In addition I simulate the efficiency-cost of the current tax system relative to popular tax reforms in both a static, life-cycle-consistent framework and in a dynamic framework. The tests suggest that there was structural change in male labor supply after the 1986 tax reform but not after the 1981 reform, while the simulations suggest an average efficiency gain of around ;Finally, in the third essay I detail may of the econometric issues underlying the robustness of the labor-supply parameters and efficiency-cost calculations generated from a sample in which each individual is observed in every time period against a more general sample in which individuals are allowed to leave the sample over time.