Economists have devoted much attention to understanding the effects of state–local fiscal policies, particularly taxes, on the growth of state-level employment. However, no one has investigated whether the effects differ by wage level. Using a state-level panel data set, the authors investigate the link between state–local taxes and the growth of employment for three wage-level categories. The authors find relatively consistent evidence supporting the proposition that the response of employment growth to changes in taxes differs by wage level.

Sohani Fatehin is a visiting professor of Economics at Dickinson College.

Fatehin, Sohani, and David L. Sjoquist. State and Local Taxes and Employment by Wage Level. Economic Development Quarterly 35, no. 1 (2021): 53-65. https://journals.sagepub.com/doi/full/10.1177/0891242420973751

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