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Labour supply in presence of taxation financing public services. An experimental approach

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Author Info
Ortona, Guido
Ottone, Stefania
Ponzano, Ferruccio
Scacciati, Francesco

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Abstract

This paper shows the results of an experiment aiming to test the effect of taxation on the labour supply. Differently from previous experiments [Lévy-Garboua, L., Masclet, D., & Montmarquette, C. (2005). Fiscalité et offre de travail: Une étude experimentale. CIRANO, Montréal, working paper 2005, s-23; Sillamaa, M.A., (1999). Taxpayer behavior in response to taxation: Comment and new experimental evidence. Journal of Accounting and Public Policy, 18; Sutter, M., & Weck-Hannemann, H. (2003). Taxation and the veil of ignorance - A real effort experiment of the Laffer curve. Public Choice, 115; Swenson, C.W., (1988). Taxpayer behavior in response to taxation. An experimental analysis. Journal of Accounting and Public Policy, 7], in our experiment the revenue of taxation is not left unaccounted for but employed - more realistically - to finance public goods and insurance against risk (i.e., a Welfare State). The result is a slight increase in the labour supply. This behaviour is the opposite of what was shown in the experiments quoted above, but is consistent with a theoretical model suggested by Bird in 2001 [Bird, E.J., (2001). Does the welfare state induce risk-taking? Journal of Public Economics, 80]. The use of the tax revenue appears to be relevant for subjects' reaction to tax levies.

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Publisher Info
Article provided by Elsevier in its journal Journal of Economic Psychology.

Volume (Year): 29 (2008)
Issue (Month): 5 (November)
Pages: 619-631
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Handle: RePEc:eee:joepsy:v:29:y:2008:i:5:p:619-631

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Keywords: Taxation Labour supply Real effort experiment;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Bissey, Marie-Edith & Canegallo, Claudia & Ortona, Guido & Scacciati, Francesco, 2003. "Competition vs. Cooperation. An Experimental Inquiry," P.O.L.I.S. department's Working Papers 37, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
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  4. Fraschini, Angela, 2006. "Fiscal federalism in big developing countries: China and India," P.O.L.I.S. department's Working Papers 60, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
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  8. Compagnoni, Viola, 2005. "Analisi dei criteri per la definizione di standard sanitari nazionali," P.O.L.I.S. department's Working Papers 54, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
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  14. Amisano, Franco, 2002. "La corruzione amministrativa in una burocrazia di tipo concorrenziale: modelli di analisi economica," P.O.L.I.S. department's Working Papers 29, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
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  16. Marchese, Carla & Privileggi, Fabio, 2001. "Who participates in tax amnesties? Self-selection of risk-averse taxpayers," P.O.L.I.S. department's Working Papers 21, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
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  22. Bird, Edward J., 2001. "Does the welfare state induce risk-taking?," Journal of Public Economics, Elsevier, vol. 80(3), pages 357-383, June. [Downloadable!] (restricted)
Full references

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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Marchese, Carla, 2006. "Rewarding the consumer for curbing the evasion of commodity taxes?," P.O.L.I.S. department's Working Papers 72, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
  2. Ticchi, Davide & Vindigni, Andrea, 2007. "War and endogenous democracy," P.O.L.I.S. department's Working Papers 97, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
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  3. Marchese, Carla & Privileggi, Fabio, 2007. "Increasing the efficiency of the 'Studi di Settore' might backfire," P.O.L.I.S. department's Working Papers 83, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
  4. Ottone, Stefania & Ponzano, Ferruccio & Ricciuti, Roberto, 2007. "Simulating voting rule reforms for the Italian parliament. An economic perspective," P.O.L.I.S. department's Working Papers 88, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
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  5. Ottone, Stefania, 2007. "Are people samaritans or avengers?," P.O.L.I.S. department's Working Papers 77, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
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  6. Ottone, Stefania & Ponzano, Ferruccio, 2007. "Non-self-centered inequity aversion matters. A model," P.O.L.I.S. department's Working Papers 91, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
  7. Privileggi, Fabio, 2007. "The cutoff policy of taxation when CRRA taxpayers differ in risk aversion coefficients and income: a proof," P.O.L.I.S. department's Working Papers 99, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
  8. Migheli, Matteo & Scacciati, Francesco, 2009. "How does labor supply react to different tax rates? A field inquiry," P.O.L.I.S. department's Working Papers 124, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
  9. Cugno, Franco & Ottoz, Elisabetta, 2006. "Static inefficiency of compulsory licensing: Quantity vs. price competition," P.O.L.I.S. department's Working Papers 73, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
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  10. Montefiori, Marcello & Resta, Marina, 2008. "Social influence and neighbourhood effects in the health care market," P.O.L.I.S. department's Working Papers 98, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
  11. Bissey, Marie-Edith & Ortona, Guido, 2007. "The program for the simulation of electoral systems ALEX4.1: what it does and how to use it," P.O.L.I.S. department's Working Papers 82, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
  12. Nicita, Antonio & Ramello, Giovanni B., 2006. "Property, liability and market power: The antitrust side of copyright," P.O.L.I.S. department's Working Papers 75, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
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