First version: January 2026 ( single-authored, paper coming soon)

Abstract:

I estimate dynamic intensive-margin responses of income from tax changes by using legislated changes in marginal and average tax rates across the income distribution. Using instrumented variation in both marginal and average tax rates in Norway, I find that individuals adjust fully to these long-run income changes after three years.

The results indicate that income effects dominate substitution effects, consistent with current evidence on long-run labour supply. I further document that the income effect increases monotonically with consumption. Finally, I discuss implications for preference specifications and long run intensive labour supply.

First version: November 2025 (w. Martin B. Holm and Knut W. Heimdal, paper coming soon)

Abstract:

We study how federal transfers to local governments affect local output. We develop a framework in which this outside-financed multiplier depends on import leakage, labor supply elasticity, capital use in public production, industry composition, and taxation. Using plausibly exogenous variation in federal transfers to Norwegian municipalities, we estimate an average multiplier of 1.1: one krone in transfers raises local output by 1.1 kroner. Multipliers are about 2 in municipalities with low import shares and about 0.9 in those with high import shares. This heterogeneity is consistent with our framework provided that labor is elastically supplied.