Information technology and the U.S. productivity acceleration

Information technology ; Productivity

The acceleration in U.S. total productivity after 1995: the role of information technology

Under standard conditions, total factor productivity (TFP) growth measures the pace of innovation or technological change in the economy. This article focuses on the period since the mid-1990s, when TFP accelerated. The authors find that most of the acceleration is accounted for by industries that use, rather than sectors that produce, information technology.Productivity ; Information technology ; Labor productivity

Taxes and international risk sharing

We extend a standard model of international risk sharing to include an empirically plausible distortion: Taxes. The tax-inclusive theory implies, even under full risk sharing, a predictable relationship between consumption growth and the consumption and capital income tax rates, both within and across countries. We find strong empirical evidence in favor of this relationship. While idiosyncratic output fluctuations account for substantially more of cross-country consumption growth variability than do taxes, trends in tax differentials are found to be informative about the dynamic evolution of international risk sharing. In particular, adjusting for capital taxes reveals a marked improvement in risk sharing over the last three decades that is absent in baseline measures. This improvement has been driven by the convergence of average tax rates on capital income across OECD countries toward the United States average capital tax rate

Essays on the Effects of Taxation.

This dissertation focuses on under-explored impacts of taxation, including how it influences the behavior of individuals, the interaction between firms and workers, and the economy as a whole. In the three essays, I test theoretical predictions through empirical analyses, from both micro and a macro perspectives and using disparate methodologies as required by the disparate problems I address. The first essay examines the Savers Credit, which is a tax credit given to low and middle income households for contributing to a retirement savings plan. I assess the response resulting from the policys incentive structure gauged through misreported income, and I test whether the policy was effective in achieving its goal of increasing retirement contributions. I find that individuals indeed responded to the policy's unintended incentive to misreport income. On the other hand, individuals failed to increase retirement contributions on the margin. The second essay, co-written with Matthew Rutledge, analyzes whether changes made to marginal tax rates affect pre-tax wage rates. We formally test this assumption by focusing on the Tax Reform Act of 1986, which, most notably, made large changes to the personal income tax. We find that changes in net-of-tax rates are negatively associated with pre-tax wage rates. Our empirical analysis explores how taxes can affect the wage rates offered to workers, and fails to support the claim that pre-tax wage rates are invariant to changes in marginal tax rates. The third essay, co-written with Brendan Epstein, studies the role that taxes play in determining aggregate labor hours. Past studies have explained differences in labor hours per population across countries by looking at differences in effective tax rates. Our study provides additional insight on this topic by showing that the standard neoclassical model with taxes is a better predictor of hours per worker rather than hours per population due to its inability to capture changes in employment. We then develop a model that incorporates this insight and find that our model accounts for a larger fraction of aggregate data on hours per worker than the standard neoclassical model with taxes.Ph.D.EconomicsUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/78915/1/ramnath_1.pd

Trends in aggregate employment, hours worked per worker, and the long-run labor wedge

Hours worked are fundamentally important for aggregate economic activity, yet canonical macroeconomic models fail dramatically at tracking its long-run trends. We develop an intuitive and tractable extension of the canonical model that decomposes trend hours into extensive and intensive margins via household-side employment-attainment costs and firm-side employment adjustment costs. Its predictions track very well the trend behavior of hours, and its two underlying margins, in the United States and a host of OECD countries. Our framework is relevant for analyzing the long run labor-market effects of a number of factors such as productivity growth, and tax or labor-market reforms

Trends in aggregate employment, hours worked per worker, and the long-run labor wedge

Hours worked are fundamentally important for aggregate economic activity, yet canonical macroeconomic models fail dramatically at tracking its long-run trends. We develop an intuitive and tractable extension of the canonical model that decomposes trend hours into extensive and intensive margins via household-side employment-attainment costs and firm-side employment adjustment costs. Its predictions track very well the trend behavior of hours, and its two underlying margins, in the United States and a host of OECD countries. Our framework is relevant for analyzing the long run labor-market effects of a number of factors such as productivity growth, and tax or labor-market reforms