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Can Tax Policy Curb Workaholism?

From a Michigan Office of Tax Policy Research press release:

Tax policy may moderate workaholism, just as cigarette excise taxes can curtail smoking, says a University of Michigan economist. "High-income, highly educated people are particularly likely to suffer from workaholism with regard to deciding when to retire—going cold turkey on their addictive behavior," said Joel Slemrod, professor of business economics and public policy at U-M’s Stephen M. Ross School of Business and director of the Office of Tax Policy Research.

Workaholism, he says, has been linked to a variety of health problems, including exhaustion, stress and high blood pressure, and can take an emotional and mental toll on a worker’s family. Unlike cigarette excise taxes, which are highly regressive (those with lower incomes pay a greater proportion of income in taxes), the appropriate corrective policy for workaholics—who tend to make more money—might involve a more progressive income tax burden (those with higher incomes pay a higher proportion of income in taxes) than otherwise, Slemrod says.

Using data from U-M’s Retirement History Survey and Panel Study of Income Dynamics, Slemrod and colleague Daniel Hamermesh of the University of Texas found that workers with more education are less likely to follow through with their intended plans to retire. In fact, each additional year of schooling reduces the likelihood of being fully or partly retired by about as much as one-third of a year’s increase in the planned age of retirement.

The paper is The Economics of Workaholism: We Should Not Have Worked on This Paper.  Here is the abstract:

A large literature examines the addictive properties of such behaviors as smoking, drinking alcohol and eating. We argue that for some people addictive behavior may apply to a much more central aspect of economic life: working. Workaholism is subject to the same concerns about the individual as other addictions, is more likely to be a problem of higher-income individuals, and can, under conditions of jointness in the workplace or the household, generate negative spillovers onto individuals around the workaholic. Using the Retirement History Survey and the Panel Study of Income Dynamics, we find evidence that is consistent with the idea that high-income, highly educated people suffer from workaholism with regard to retiring, in that they are more likely to postpone earlier plans for retirement. The evidence and theory suggest that the negative effects of workaholism can be addressed with a more progressive income tax system than would be appropriate in the absence of this behavior.


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One response to “Can Tax Policy Curb Workaholism?”

  1. Workplace Prof Blog Avatar

    Tax Policy and Workaholics

    Great post from Paul Caron at TaxProf Blog about a recent press release and paper discussing how tax policy might be used to undermine workalcoholism in our midst. Now, my question is whether such strategy would help blogging workalcoholics?