Taxes and the Labor Supply of the Stars

Abstract

Do high taxes cause superstars to work less? We test this hypothesis using complete data on Hollywood movie stars’ labor supply from 1927 to 2014. Changes to marginal tax rates in high tax brackets have no significant effect on the number of films a movie star makes each year. However, in years with high taxes stars produce more highly rated movies with award-winning directors, potentially substituting prestigious films for pecuniary gains.