Costs of adjustment delay and complicate behavioral response to tax change. To accommodate such response, we integrate a dynamic discrete choice framework into optimal tax theory. We identify long run outcomes with stationary distributions of workers over income-generating states and formulate optimal tax equations in terms of the sensitivity of such distributions to consumption variation. We obtain formulas for these sensitivities that facilitate quantitative evaluation of long run substitution patterns. Novel “inverted” optimal tax equations are derived that establish marginal costs of inducing long run population movements to states as sufficient statistics for optimal taxes. The optimal tax implications of a dynamic quantitative model of occupational choice are analyzed.

This paper investigates the labor market consequences of technological change. Specifically, it examines the role of search frictions and transition costs in determining the impact of new technologies on displacement and reallocation of the workforce. To that end, it extends the dynamic discrete choice model of occupational choice to include search frictions and transition costs and embeds it into a general equilibrium search environment. Estimation results show that transition costs faced by workers in automatable jobs are particularly high, and search frictions significantly curtail their ability to transition away from jobs vulnerable to labor substituting technology. Furthermore, low-cost transitions for these workers are towards other highly automatable occupations. Consequently, if such occupations would undergo automation in a similar timeline, the impact of new technologies would be greatly amplified. 

This paper quantifies the welfare loss caused by two different federal trade secret protections in the United States. We provide the first empirical evidence that the Economic Espionage Act of 1996 (EEA) and Defend Trade Secrets Act of 2016 (DTSA) caused firms to substitute from patents to trade secrets to protect intellectual property. Next, combining these empirical results with an original model of follow-the-leader innovation and intellectual property protection choice, we compute aggregate welfare loss due to decreased information sharing and redundant R&D. We find the EEA and DTSA has decreased welfare, highlighting the importance of information disclosure in the modern economy.

This paper analyzes the impact of increased labor costs on technology adoption and its effects on the skill demand. Our focus is twofold: (i) "Do higher labor costs induce  firms to automate?", (ii) "How do the skill usage of the impacted employees change?". We leverage the introduction of minimum wages in Germany in 2015 to answer these questions using the BiBB Employment Surveys. Our evidence comes from a difference in differences design which exploits variation at the regional level in the increase in the wage bill resulting from the minimum wage reform. We find that low-wage employees are more likely to report that their employers introduced new machines. A one percentage point increase in the wage bill resulting from the minimum wage change leads to a 3.2 percentage point increase in the technological change measure and a 5.3 percentage point increase in the new machines measure of technological change. However, the same set of workers were not more likely to report their employers increased skill demands.