ACA and EMTRs

Income-linked benefits with abatement regimes can do nasty things to work incentives. Here's Casey Mulligan on the recent changes to US health care:

Under the Affordable Care Act, between six and eleven million workers would increase their disposable income by cutting their weekly work hours. About half of them would primarily do so by making themselves eligible for the ACA's federal assistance with health insurance premiums and out-of-pocket health costs, despite the fact that subsidized workers are not able to pay health premiums with pre-tax dollars. The remainder would do so primarily by relieving their employers from penalties, or the threat of penalties, pursuant to the ACA's employer mandate. Women, especially those who are not married, are more likely than men to have their short-term financial reward to full-time work eliminated by the ACA. Additional workers, beyond the six to eleven million, could increase their disposable income by using reduced hours to climb one of the "cliffs" that are part of the ACA's mapping from household income to federal assistance.

As StatsNZ is starting to link up all their individual datasets, we might finally be able to start working out whether New Zealand's Working for Families regime had similar effects on second earners in particular income/child categories. WFF benefits abate with family income and so strongly increase effective marginal tax rates. Since second earners' labour supply is more elastic, this ought to have disproportionately affected female labour supply. It's a Masters thesis waiting to be written.