Working Paper: NBER ID: w19936
Authors: Casey B. Mulligan
Abstract: Hours, employment, and income taxes are economically distinct, and all three are either introduced or expanded by the Affordable Care Act beginning in 2014. The tax wedges push some workers to work more hours per week (for the weeks that they are on a payroll), and others to work less, with an average weekly hours effect that tends to be small and may be in either direction. A conservative estimate of the law's average employment rate impact is negative three percent. The ACA's tax wedges and ultimately its behavioral effects vary substantially across groups, with the elderly experiencing hardly any new disincentive and unmarried household heads experiencing tax wedges that are about twice the average. My estimates suggest that about four percent of the workforce will work less than the legislated 30-hour threshold solely to avoid the implicit and explicit full-time employment taxes.
Keywords: No keywords provided
JEL Codes: E24; I13; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ACA's tax wedges (H26) | increase weekly hours (J22) |
| ACA's tax wedges (H26) | decrease weekly hours (J22) |
| ACA's tax wedges (H26) | overall small average effect (C92) |
| 4% of workforce (J21) | work less than 30-hour threshold (J22) |
| ACA's provisions (G52) | negative impact on employment rates (F66) |
| unmarried household heads (J12) | experience tax wedges about twice the average (H29) |