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Negative Income Tax and Family Labor Supply in Canada

Author

Listed:
  • John Baffoe-Bonnie

    (Penn State University)

Abstract

Models of the labor supply of an individual family member's response to a Negative Income Tax (NIT) have often ignored family labor-supply interactions. This paper presents results indicating that, accounting for cross-substitution effects, an NIT has different impacts on the labor supply of family members. The female tends to reduce her labor supply at all levels of tax rate and guaranteed income, while the male increases his labor supply at certain program parameter levels. This seems to suggest that the work disincentive effect and the aggregate cost of an NIT may be less than has previously been thought for males. The empirical results also show that an NIT has different effects on the labor supply of family members working in different segments of the labor market, and that the measured effects are sensitive to choice of functional form.

Suggested Citation

  • John Baffoe-Bonnie, 1995. "Negative Income Tax and Family Labor Supply in Canada," Eastern Economic Journal, Eastern Economic Association, vol. 21(2), pages 197-213, Spring.
    • Handle: RePEc:eej:eeconj:v:21:y:1995:i:2:p:197-213
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume21/V21N2P197_213.pdf
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    Citations

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    Cited by:

    1. Atallah, Gamal, 1998. "Les impôts sur le revenu et l’offre de travail des femmes mariées : une revue de la littérature," L'Actualité Economique, Société Canadienne de Science Economique, vol. 74(1), pages 95-128, mars.
    2. Paolo Brunori & Maria Concetta Chiuri & Vito Peragine, 2010. "The Economic effects of a Local Minimum Income Support Program," SERIES 0029, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Mar 2010.

    More about this item

    Keywords

    Labor Supply;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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