Dayanand Manoli

Nonparametric Evidence on the Effects of Retirement Benefits on Labor Force Participation Decisions

This paper presents new empirical evidence on the effects of retirement benefits on labor force participation decisions. We use administrative data on the census of private sector employees in Austria and variation from mandated discontinuous changes in retirement benefits from the Austrian pension system. We present nonparametric, graphical evidence documenting labor supply responses to the policy discontinuities. Next, based on the nonparametric evidence and mandated financial incentives, we estimate extensive margin labor supply elasticities. We estimate elasticities of 0.12 for men and 0.38 for women. The evidence indicates these elasticities are primarily driven by substitution effects rather than wealth effects.

Tax Enforcement and Tax Policy: Evidence on Taxpayer Responses to EITC Correspondence Audits

Each year, the United States Internal Revenue Service identifies taxpayers who may have erroneously claimed Earned Income Tax credit (EITC) benefits and requests additional documentation from these taxpayers to verify these claims. This paper exploits random variation inherent in audit selection processes to estimate the impacts of these EITC correspondence audits on taxpayer behaviors. Roughly 80% of EITC correspondence audits in the analysis sample have full disallowances due to undelivered mail, nonresponse or insufficient response. Cases of disallowances with confirmed ineligibility make up 15% of EITC correspondence audits in the analysis sample. In years after being audited, taxpayers have decreases in the likelihoods of claiming EITC benefits and filing tax returns so that they subsequently forego benefits from potentially legitimate EITC claims, other refundable credit claims and withholdings. For every

Are Micro and Macro Labor Supply Elasticities Consistent? A Review of Evidence on the Intensive and Extensive Margins

1 that is audited, roughly

Does Indivisible Labor Explain the Difference between Micro and Macro Elasticities? A Meta-Analysis of Extensive Margin Elasticities

0.63 to

Psychological Frictions and the Incomplete Take-Up of Social Benefits: Evidence from an IRS Field Experiment

0.73 of tax refunds is unclaimed in years after the audits. Additionally, spillovers from audited taxpayers to other taxpayers arise because qualifying children on audited returns are more likely to be subsequently claimed by other taxpayers after the audits. These spillovers indicate that net overpayments may be less than gross overpayments since ineligible qualifying children on audited returns could be potentially eligible qualifying children on other taxpayers’ returns. Lastly, EITC correspondence audits affect real economic activity as wage earners have changes in the likelihood of having wage employment in the years after being audited.Each year, the United States Internal Revenue Service identifies taxpayers who may have erroneously claimed Earned Income Tax Credit (EITC) benefits and audits them through a mail correspondence process to verify their claims. This paper exploits the random variation arising from certain aspects of the audit selection process to estimate the impacts of these EITC correspondence audits on taxpayer behaviors. In the years after being audited, taxpayers are less likely to claim EITC benefits, and most of the reduction appears to be in EITC claims that may have been flagged for potential EITC noncompliance. Additionally, qualifying children on audited returns are more likely to be claimed by other taxpayers after the audits. These spillovers indicate that net overpayments may be less than gross overpayments, since ineligible qualifying children on audited returns could potentially be eligible qualifying children on other taxpayers’ returns. Lastly, EITC correspondence audits affect real economic activity, as wage earners experience changes in the likelihood of having wage employment in the years after being audited.