Negative Income Taxation and Labor Supply: New Evidence from the New Jersey-Pennsylvania Experiment.

by John F. Cogan

Purchase Print Copy

 FormatList Price Price
Add to Cart Paperback57 pages $20.00 $16.00 20% Web Discount

Reanalyzes the New Jersey-Pennsylvania Negative Income Tax Experiment and finds a large, statistically significant labor supply withdrawal of white male heads of household. Estimates are markedly higher than in previous analyses for the same group and suggest the President's welfare reform package costs are seriously underestimated. Methodological differences are that participating eligible families are distinguished from nonparticipating eligible families and that this empirical model explicitly controls for state welfare programs for intact households. This experimental labor supply response does not necessarily indicate the size of response to an economy-wide program. The estimates may be unique to the New Jersey-Pennsylvania accounting system, and the response in a permanent program may be quite different from that in a three year experiment. Even so, the small responses estimated earlier shaped policymakers' views about costs and this analysis indicates true costs will probably be much higher. 57 pp. Bibliog.

This report is part of the RAND Corporation Report series. The report was a product of the RAND Corporation from 1948 to 1993 that represented the principal publication documenting and transmitting RAND's major research findings and final research.

Our mission to help improve policy and decisionmaking through research and analysis is enabled through our core values of quality and objectivity and our unwavering commitment to the highest level of integrity and ethical behavior. To help ensure our research and analysis are rigorous, objective, and nonpartisan, we subject our research publications to a robust and exacting quality-assurance process; avoid both the appearance and reality of financial and other conflicts of interest through staff training, project screening, and a policy of mandatory disclosure; and pursue transparency in our research engagements through our commitment to the open publication of our research findings and recommendations, disclosure of the source of funding of published research, and policies to ensure intellectual independence. For more information, visit www.rand.org/about/principles.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.