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The Effect of Taxes on Labor Supply in Italy

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  • Ugo Colombino
  • Daniela del Boca

Abstract

In this research we estimate a neoclassical household labor supply model for married individuals, incorporating the main elements of the tax system, using Italian microdata. We found that while the labor supply of women is rather elastic with respect to wages and income variation, men's labor supply is inelastic with respect to variation in both. We use these results to measure the behavioral and welfare effects of alternative tax systems: the actual tax system, where the unit of taxation is the individual; joint family taxation; and a flat tax. The simulation results show that relative to the actual system the joint tax implies a higher average social cost but is more equally distributed. The flat tax implies a lower social cost but is less equally distributed.

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Bibliographic Info

Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

Volume (Year): 25 (1990)
Issue (Month): 3 ()
Pages: 390-414

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Handle: RePEc:uwp:jhriss:v:25:y:1990:i:3:p:390-414

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Web page: http://jhr.uwpress.org/

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Cited by:
  1. Aaberge, R. & Colombino, U. & Strom, S. & Wennemo, T., 1998. "Evaluating alternative tax reforms in Italy with a model of joint labor supply of married couples," Structural Change and Economic Dynamics, Elsevier, Elsevier, vol. 9(4), pages 415-433, December.
  2. Anil Kumar, 2004. "Taxes, Deadweight Loss and Intertemporal Female Labor Supply: Evidence from Panel Data," Center for Policy Research Working Papers, Center for Policy Research, Maxwell School, Syracuse University 61, Center for Policy Research, Maxwell School, Syracuse University.
  3. Bradley T. Heim & Bruce D. Meyer, 2003. "Work Costs and Nonconvex Preferences in the Estimation of Labor Supply Models," NBER Working Papers 9429, National Bureau of Economic Research, Inc.
  4. Carlin, Paul S. & Flood, Lennart, 1997. "Do children affect the labor supply of Swedish men? Time diary vs. survey data," Labour Economics, Elsevier, Elsevier, vol. 4(2), pages 167-183, June.
  5. Naci H. Mocan & Duha Tore Altindag, 2011. "Is Leisure a Normal Good? Evidence from the European Parliament," NBER Working Papers 17329, National Bureau of Economic Research, Inc.
  6. Stefania Marcassa & Fabrizio Colonna, 2011. "Taxation and Labor Force Participation: The Case of Italy," THEMA Working Papers, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise 2011-22, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  7. Michael Keane, 2010. "Labor Supply and Taxes: A Survey," Working Paper Series, Finance Discipline Group, UTS Business School, University of Technology, Sydney 160, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
  8. repec:dgr:uvatin:2006017 is not listed on IDEAS
  9. Fabrizio Colonna & Stefania Marcassa, 2013. "Taxation and labor force participation: the case of Italy," Questioni di Economia e Finanza (Occasional Papers), Bank of Italy, Economic Research and International Relations Area 191, Bank of Italy, Economic Research and International Relations Area.
  10. Keane, Michael, 2010. "The Tax-Transfer System and Labour Supply," MPRA Paper 55167, University Library of Munich, Germany.
  11. Bardasi, Elena & Gornick, Janet C., 2000. "Women and part-time employment: workers' 'choices' and wage penalties in five industrialized countries," ISER Working Paper Series 2000-11, Institute for Social and Economic Research.

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