Dr. Matthew Gudgeon is an Assistant Professor of Economics at the United States Military Academy in West Point, New York. His research focuses on labor economics, public economics and political economy. He teaches courses in principles of economics and economic development. He holds a Ph.D. and M.A. in economics from Boston University. Visit Dr. Gudgeon’s website at https://sites.google.com/site/matthewgudgeon/
Ongoing Research Projects
“The Speed of Earnings Responses to Taxation and the Role of Firm Labor Demand” (with Simon Trenkle). This paper studies the speed at which workers’ pre-tax earnings respond to tax reforms along the intensive margin. We do so in the context of Germany, where a large discontinuity — or notch — in the tax schedule induces sharp bunching in the earnings distribution at the notch. We analyze earnings responses to two policy reforms that shift this notch rightward. In a frictionless world, all the workers that made up the excess mass at the old notch should instantly increase their earnings. While
some of these workers indeed adjust rapidly, increasing earnings and often hours, over 40% do not,
and instead take several years to adjust. We argue that heterogeneity in firm labor demand plays a
key role in generating the observed variation in the speed of workers’ earnings responses. We pro-
pose a framework in which some firms will find it optimal to delay increasing their workers’ hours post-reform. Our framework predicts delays will be shortest at growing firms, where both workers and firms benefit from immediate increases in hours. We test and find support for these demand-side effects in our linked employer-employee data. Our results suggest that labor demand can account for up to 18% of the non-adjustment behavior in the first post-reform year.
Publications & Presentations
“The Speed of Earnings Responses to Taxation and the Role of Firm Labor Demand” (with Simon Trenkle). Paper presented at University of British Columbia (2018), University of Cambridge (2018), U.S. Census Bureau (2018), 6th Lindau Meeting on Economic Sciences (2018), IZA Summer School in Labor Economics (2016), SOLE (2016).
“The Labor Supply Effects of Unemployment Insurance for Older Workers” (with Johannes Schmieder, Simon Trenkle, and Han Ye). Paper presented at SOLE (2017).
“The Political Boundaries of Ethnic Divisions” (with Samuel Bazzi). Paper presented at AEA/ASSA (2017), NBER Political Economy SI (2016), ESOC (2016), NEUDC (2015), NBER National Security Winter Meeting (2015).
“The Promise and Pitfalls of Conflict Prediction: Evidence from Columbia and Indonesia” (with Samuel Bazzi, Robert Blair, Christopher Blattman, Oeindrila Dube, and Richard Peck). Paper presented at NBER National Security Winter Meeting (2016), NEUDC (2016).