TY  - RPRT
        AU  - Frederiksen, Anders
AU  - Halliday, Timothy J.
AU  - Koch, Alexander K.
        TI  - What Do We Work For? An Anatomy of Pre- and Post-Tax Earnings Growth
        PY  - 2010/Nov/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 5298
        UR  - https://www.iza.org/publications/dp5298
        AB  - Promotions and cross-firm mobility provide substantial gains in earnings – a well established finding based on gross income data. Yet, what matters for incentives is how much an individual can consume or save after taxation. We show that net and gross income growth patterns may differ substantially when a progressive tax system allows for deduction opportunities. Exploiting unique matched employer-employee data with information on tax payments and employee mobility, we find that gross income gains from promotions and cross-firm mobility do not translate into significantly higher net income growth, because employees adjust their tax-shielded consumption and savings (in particular, deductible private pension contributions and mortgage-financed housing) to maintain constant net income growth.
        KW  - earnings growth
KW  - promotions
KW  - mobility
KW  - taxable income
KW  - dynamic panel data models
KW  - matched employer-employee data
        ER  -