On modeling household labor supply with taxation

DC FieldValueLanguage
dc.contributor.authorBargain, Olivier-
dc.date.accessioned2009-03-12T15:13:48Z-
dc.date.available2009-03-12T15:13:48Z-
dc.date.copyrightUCD School of Economics 2007en
dc.date.issued2007-08-
dc.identifier.other200711en
dc.identifier.urihttp://hdl.handle.net/10197/956-
dc.description.abstractDiscrete 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.en
dc.format.extent239820 bytes-
dc.format.mimetypeapplication/pdf-
dc.language.isoenen
dc.publisherUniversity College Dublin. School of Economicsen
dc.relation.ispartofseriesUCD Centre for Economic Research Working Paper Seriesen
dc.relation.ispartofseriesWP07/11en
dc.subjectMultinomial logiten
dc.subjectHousehold labor supplyen
dc.subjectTax reformen
dc.subjectUnitary modelen
dc.subjectCollective modelen
dc.subject.classificationC25en
dc.subject.classificationC52en
dc.subject.classificationH31en
dc.subject.classificationJ22en
dc.subject.lcshHouseholds--Economic aspectsen
dc.subject.lcshLabor supply--Econometric modelsen
dc.subject.lcshTaxationen
dc.titleOn modeling household labor supply with taxationen
dc.typeWorking Paperen
dc.internal.authorurlOlivier Bargain (web page)en
dc.internal.authorurlhttp://www.ucd.ie/research/people/economics/drolivierbargain/en
dc.internal.authoridUCD0001en
dc.internal.availabilityFull text availableen
dc.internal.webversionshttp://www.ucd.ie/economics/research/papers/2007/WP07.11.pdf-
dc.statusNot peer revieweden
dc.neeo.contributorBargain|Olivier|aut|-
item.grantfulltextopen-
item.fulltextWith Fulltext-
Appears in Collections:Geary Institute Research Collection
Economics Working Papers & Policy Papers
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