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A structural approach to estimating the effect of taxation on the labour market dynamics of older workers

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  • Peter Haan
  • Victoria Prowse

Abstract

We estimate a dynamic structural life-cycle model of employment, non-employment and retirement that includes endogenous accumulation of human capital and intertemporal non-separabilities in preferences. In addition, the model accounts for the effects of income tax, social security contributions and the transfer system on work incentives. The structural parameter estimates are used to evaluate the employment effects of a tax reform focused on low-income individuals. This tax reform is found to cause a significant increase in employment and we find evidence for anticipation effects if the reform is targeted only at older workers. Copyright (C) 2010 The Author(s). The Econometrics Journal (C) 2010 Royal Economic Society

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  • Peter Haan & Victoria Prowse, 2010. "A structural approach to estimating the effect of taxation on the labour market dynamics of older workers," Econometrics Journal, Royal Economic Society, vol. 13(3), pages 99-125, October.
    • Handle: RePEc:ect:emjrnl:v:13:y:2010:i:3:p:s99-s125
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    Cited by:

    1. Marco Caliendo & Frank Fossen & Alexander Kritikos, 2014. "Personality characteristics and the decisions to become and stay self-employed," Small Business Economics, Springer, vol. 42(4), pages 787-814, April.
    2. Victoria Prowse & Peter Haan, 2010. "The design of unemployment transfers: Evidence from a dynamic structural life-cycle model," Economics Series Working Papers 478, University of Oxford, Department of Economics.
    3. Maria Rosaria Marino & Marzia Romanelli & Martino Tasso, 2016. "Women at work: the impact of welfare and fiscal policies in a dynamic labor supply model," Temi di discussione (Economic working papers) 1084, Bank of Italy, Economic Research and International Relations Area.
    4. Irina Merkurieva, 2018. "Late Career Job Loss and the Decision to Retire," Discussion Paper Series, School of Economics and Finance 201606, School of Economics and Finance, University of St Andrews.
    5. Holger Bonin & Reinhold Schnabel & Holger Stichnoth, 2014. "Zur Effizienz der ehe- und familienbezogenen Leistungen in Deutschland im Hinblick auf soziale Sicherungs- und Beschäftigungsziele," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 83(1), pages 29-48.

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    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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