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Labor Supply, Taxes, And Government Spending: A Microeconometric Analysis

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  • Karen Smith Conway

Abstract

The effect of government spending on labor supply behavior is critical to predicting the balanced-budget effect of income taxes and to estimating the marginal social cost of public funds. Yet, its very existence, not to mention direction and magnitude, has not been empirically investigated. This research estimates a labor supply function that incorporates income taxation and government spending using microeconomic data for men and women. The empirical results suggest that public sector spending may have a significant effect on labor supply, thereby leading to estimates of the marginal social cost of public funds that differ from those typically calculated. © 1997 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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  • Karen Smith Conway, 1997. "Labor Supply, Taxes, And Government Spending: A Microeconometric Analysis," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 50-67, February.
    • Handle: RePEc:tpr:restat:v:79:y:1997:i:1:p:50-67
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    Cited by:

    1. Huet-Vaughn, Emiliano & Robbett, Andrea & Spitzer, Matthew, 2019. "A taste for taxes: Minimizing distortions using political preferences," Journal of Public Economics, Elsevier, vol. 180(C).
    2. Duncan, Denvil & Peter, Klara Sabirianova, 2009. "Does Labor Supply Respond to a Flat Tax? Evidence from the Russian Tax Reform," IZA Discussion Papers 4257, Institute of Labor Economics (IZA).
    3. Chiappori, Pierre-André & Fortin, Bernard & Lacroix, Guy, 1998. "Household Labor Supply, Sharing Rule and the Marriage Market," Cahiers de recherche 9810, Université Laval - Département d'économique.
    4. Karen Smith Conway, 1999. "Are Workers “Ricardian†? Estimating the Labor Supply Effects of State Fiscal Policy," Public Finance Review, , vol. 27(2), pages 160-193, March.
    5. Mattos, Enlinson & Terra, Rafael, 2016. "Cash-cum-in-kind transfers and income tax function," Textos para discussão 414, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
    6. Yankow, Jeffrey J., 2014. "A Longitudinal Analysis of the Impact of State Economic Freedom on Individual Wages," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 44(1).
    7. Flavio Marques & Simone Covre & Enlinson Mattos, 2008. "Oferta de trabalho e transferências: Evidências do efeito das condições impostas pelo programa Bolsa-Família," Anais do XXXVI Encontro Nacional de Economia [Proceedings of the 36th Brazilian Economics Meeting] 200807141223420, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    8. Denvil Duncan & Klara Sabirianova Peter, 2010. "Does labour supply respond to a flat tax?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(2), pages 365-404, April.
    9. Pierre St-Amant & David Tessier, 1998. "Tendance des dépenses publiques et de l'inflation et évolution comparative du taux de chômage au Canada et aux États-Unis," Staff Working Papers 98-3, Bank of Canada.

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