Suchergebnisse

Drawing on previous findings that married men earn more than never-married or divorced men, explored here is whether married men are seen to earn more because they are economically attractive candidates for marriage in the first place. Data on 2,350 young employed men followed from the 1979 to the 1984 waves of the Panel Study of Income Dynamics are used to model individual transitions in marital status as functions of variables that capture men's earnings prospects. Analysis reveals that single men who are characterized by favorable earnings residuals are more likely to marry. Married men with favorable expected earnings are less prone to divorce. The observed earnings premium of married men results in part from economic selection of high earners into marriage. 6 Tables, 23 References. Adapted from the source document.

We set up a simple model of tax competition for mobile, highly-skilled and overconfident managers. Firms endogenously choose the compensation scheme for managers, which consists of a fixed wage and a bonus payment in the high state. Managers are overconfident about the probability of the high state and hence of receiving the bonus, whereas firms and governments are not. In this setting we show that overconfidence (i) unambiguously increases the bonus component in the managers' compensation package and (ii) it reduces the bonus tax rate that governments set in the non-cooperative tax equilibrium. Hence overconfidence can contribute to explaining both the increasing role of bonus contracts and the fall in marginal tax rates for high-income earners.