Now showing 1 - 10 of 28
  • Publication
    On modeling household labor supply with taxation
    (University College Dublin. School of Economics, 2007-08)
    Discrete choice models of labor supply easily account for nonlinearity and nonconvexity in budget sets caused by tax-benefit systems. As a result, they have become very popular for ex ante evaluations of policy reforms. In this paper, we question whether the degree of flexibility and the implicit household representation in these models are satisfying when confronted to the data. First, we show that attempts to interpret discrete models structurally lead to unnecessary parametric restrictions in most studies. We suggest instead a fully flexible model that retains usual assumptions on economic rationality except regularity conditions on leisure. Indeed, coefficients may account for both tastes and costs of work, possibly making 'preferences' appear nonconvex. Second, we show that the static unitary representation, implicit in most tax policy analyses, is rejected against a more general model with price- and income- dependent preferences. The latter can be rationalized in terms of collective or intertemporal models and offers promising perspectives in these directions. Simulations show that the magnitude of predicted labor supply responses to tax-benefit reforms is sensitive to the underlying household representation.
      217
  • Publication
    Beans for breakfast? How exportable is the British workfare model?
    (The Institute for the Study of Labor (IZA), 2006-03) ;
    Social assistance and inactivity traps have long been considered amongst the main causes of the poor employment performance of EU countries. The success of New Labour has triggered a growing interests in instruments capable of combining the promotion of responsibility and self-sufficiency with solidarity with less skilled workers. Making-work-pay (MWP) policies, consisting of transfers to households with low earning capacity, have quickly emerged as the most politically acceptable instruments in tax-benefit reforms of many Anglo Saxon countries. This chapter explores the impact of introducing the British Working Families' Tax Credit in three EU countries with rather different labor market and welfare institutions: Finland, France and Germany. Simulating the reform reveals that, while first round effects on income distribution is considerable, the interaction of the new instrument with the structural characteristics of the economy and the population may lead to counterproductive second round effects (i.e. changes in economic behavior). The implementation of the reform, in this case, could only be justified if the social inclusion (i.e. transition into activity) of some specific household types (singles and single mothers) is valued more than a rise in the employment per se.
      440
  • Publication
    Revisiting the cost of children : theory and evidence from Ireland
    (Irish Economic Association, 2009-01-13) ;
    In this paper, we suggest a collective model with parents and (young) children. We identify and estimate scale economies in households and the sharing rule between husband, wife and children. While adult shares and economies of scale are identi…ed thanks to the estimation of individual Engel curves on single individuals, the identi…cation of the resource share accruing to children (the cost of children) requires the observation of adult-speci…c goods as in the traditional Rothbarth method. The useful aspect of the present approach is that it requires only the estimation of Engel curves on cross-sectional data, i.e. price variation is not required. This is an advan- tage for many countries where price variations is indeed limited, as in our application on Irish data.
      183
  • Publication
    The measurement of child costs : evidence from Ireland
    (University College Dublin. School of Economics, 2010-01) ; ;
    We apply an extension of the Rothbarth approach to estimate the share of household resources accruing to children (i.e., the cost of children) in Ireland. The method also allows us to identify the economies of scale in the household and indifference scales in Lewbel (2003)'s sense. A practical aspect of the present approach is that it does not require price variation. The identi cation of the children's share requires the observation of adult-speci c goods as in the traditional Rothbarth method. We compare our fi ndings to previous results for Ireland.
      164
  • Publication
    Effets d'une réforme fiscale sur l'offre de travail des ménages dans un cadre collectif simulé
    (École des Hautes Études Commerciales de Montréal, 2006) ;
    La littérature contient très peu de recherches empiriques concernant les effets distributifs du système sociofiscal à l’intérieur du ménage. Nous simulons cet effet dans le cadre du modèle collectif d’offre de travail lorsque l’on passe d’une taxation jointe à une taxation individuelle en France. Nous montrons que la contribution relative de l’épouse aux revenus familiaux après impôts est un déterminant significatif de la négociation au sein du couple, avec une très faible élasticité cependant. En conséquence, les réactions d’offre de travail dues à la réforme sont essentiellement induites par les effets traditionnels (substitution et revenu), tout comme dans un modèle unitaire. Une analyse de sensibilité montre que l’effet distributif capturé par le cadre collectif est significatif seulement dans le cas de réformes fiscales de grande ampleur et peu réalistes. Ce résultat suggère cependant d’amplifier les recherches sur le lien entre fiscalité, transferts et décision intrafamiliale. En particulier, il convient d’ajouter plus de structure que n’en permet le modèle collectif afin de caractériser plus précisément la façon dont la fiscalité pourrait jouer sur la négociation au sein du ménage.
      622
  • Publication
    How tight are safety-nets in Nordic countries? : evidence from Finnish register data
    (University College Dublin; School of Economics, 2007-08) ; ;
    The non take-up of social assistance benefits due to claim costs may seriously limit the anti-poverty effect of these programs. Yet, available evidence is fragmented and mostly relies on interview-based data, potentially biased by misreporting and measurement errors on both bene…t entitlement and income levels used to assess eligibility. In this paper, we use Finnish administrative data to compare eligibility and actual receipt of social assistance by working-age families during the post-recession period (1996-2003). Possible errors due to time-period issues and discretionary measures by local agencies are carefully investigated. Non take-up is found to be substantial (between 40% and 50%) and increasing during the period. Using repeated cross-section estimations, we identify a set of stable determinants of claiming behavior and suggest that the increasing trend is mainly due to a composition effect, i.e. a decline in the proportion of groups with higher claiming propensity. We…finally discuss the targeting efficiency of the social assistance scheme.
      225
  • Publication
    Female labor supply and divorce : new evidence from Ireland
    (University College Dublin. School of Economics, 2010-10) ;
    If participation in the labor market helps to secure women's outside options in the case of divorce/separation, an increase in the perceived risk of marital dissolution may accelerate the increase in female labor supply. This simple prediction has been tested in the literature using time and/or spatial variation in divorce legislation (e.g., across US states), leading to mixed results. In this paper, we suggest testing this hypothesis by exploiting a more radical policy change, i.e., the legalization of divorce. In Ireland, the right to divorce was introduced in 1996, followed by an acceleration of marriage breakdown rates. We use this fundamental change in the Irish society as a natural experiment. We follow a difference-in-difference approach, using families for whom the dissolution risk is small as a control group. Our results suggest that the legalization of divorce contributed to a significant increase in female labor supply, mostly at the extensive margin. Results are not driven by selection and are robust to several specification checks, including the introduction of household fixed effects and an improved match between control and treatment groups using propensity score reweighting.
      427
  • Publication
    In-work transfers in good times and bad - simulations for Ireland
    (University College Dublin. School of Economics, 2009-12) ;
    In-work transfers are often seen as a good trade-off between redistribution and efficiency, as they alleviate poverty among low-wage households while increasing …nancial incentives to work. The present study explores the consequences of extending these transfers in Ireland, where support for low-wage households has been of limited scope. The employment and poverty effects of alternative policies are analyzed thanks to counterfactual simulations built using a micro-simulation model, the Living in Ireland Survey 2001 and labour supply estimations. Firstly, we study the effect of recent extensions of the existing scheme, the Family Income Supplement (FIS), and of its replacement by the refundable tax credit in force in the UK. Secondly, little is known about the impact of macro-level changes on the distribution of resources at the household level, which is particularly relevant in a country deeply affected by the current economic downturn. We suggest a preliminary analysis of the capacity of alternative in-work transfer scenarios to cushion the negative impact of earnings losses and cuts in the minimum wage.
      214
  • Publication
    Labor Supply Elasticities in Europe and the US
    (University College Dublin. School of Economics, 2011-07) ; ;
    Despite numerous studies on labor supply, the size of elasticities is rarely comparable across countries. In this paper, we suggest the first large-scale international comparison of elasticities, while netting out possible differences due to methods, data selection and the period of investigation. We rely on comparable data for 17 European countries and the US, a common empirical approach and a complete simulation of tax-benefit policies affecting household budgets. We find that wage-elasticities are small and vary less across countries than previously thought, e.g., between .2 and .6 for married women. Results are robust to several modeling assumptions. We show that differences in tax-benefit systems or demographic compositions explain little of the cross-country variation, leaving room for other interpretations, notably in terms of heterogeneous work preferences. We derive important implications for research on optimal taxation.
      302
  • Publication
    Beans for breakfast? How exportable is the British workfare model?
    Social assistance and inactivity traps have long been considered as one of the main causes of the poor employment performance of EU countries. The success of New Labour in the UK has triggered a growing interests in instruments capable of combining the promotion of responsibility and self-sufficiency with solidarity with less skilled workers. Making-work-pay (MWP) policies, consisting of transfers to households with low earning capacity, have quickly emerged as the most politically acceptable instruments in tax-benefit reforms of many Anglo-Saxon countries. This chapter explores the impact of introducing the British Working Families’ Tax Credit (WFTC) in three EU countries with rather different labor market and welfare institutions: Finland, France and Germany. Simulating the reform reveals that, while first-round effects on income distribution is considerable, the interaction of the new instrument with the structural characteristics of the economy and the population may lead to counterproductive second round effects (i.e. changes in economic behavior). The implementation of the reform, in this case, could only be justified if the social inclusion (i.e. transition into activity) of some specific household types (singles and single mothers) is valued more than a rise in the employment per se.
    Scopus© Citations 9  1029