Who wins, who loses? Identification of conditional causal effects, and the welfare impact of changing wages
谁获益、谁受损?条件因果效应识别与工资变化的福利影响
The incidence of tax and other policy changes depends on their impact on equilibrium wages. In a standard model of labor supply, the impact of wage changes on a worker’s welfare equals current labor supply times the induced wage change. Worker heterogeneity implies that wage changes vary across workers. In this context, in order to identify welfare effects one needs to identify the causal effect of policy changes on wages conditional on baseline labor supply and wages.