@techreport{NBERw1163, title = "Variable Earnings and Nonlinear Taxation", author = "Michael Rothschild and Robert Moffitt", institution = "National Bureau of Economic Research", type = "Working Paper", series = "Working Paper Series", number = "1163", year = "1983", month = "June", doi = {10.3386/w1163}, URL = "http://www.nber.org/papers/w1163", abstract = {We explore the interaction between two facts. The first is that income is variable; the second is that the tax and transfer system transforms before tax income into after tax income in highly non-linear ways. The effect is to penalize (and reward) income variability in a manner which is both substantial and capricious.}, }