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Farm Household Decisions Under Various Tax Policies: Comparative Static Results And Evidence From Household Data

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  • Henningsen, Arne
  • Glauben, Thomas
  • Henning, Christian H.C.A.

Abstract

The study is devoted to the comparative static analysis and econometric estimation of farm household decisions under both standard and agricultural taxes. Accounting for labor market constraints a non-separable model is constructed implying increasing per-unit costs of accessing labor markets. To control for tax-induced adjustments related to labor market imperfections we compare the results to those derived from a separable approach, assuming perfect labor markets. Theoretical results suggest that most tax-induced responses are ambivalent mainly caused by shadow prices effects. Further, tax-induced effects differ between the two model versions. In particular standard taxes may imply production adjustments in the case of non-separability. Thus, income and value-added taxes are no more necessarily superior to agricultural taxes. Econometric analysis using individual household data from Mid-West Poland indicates remarkable responses to market surplus and input taxes. In contrast, standard and land taxes imply only negligible production adjustments. Thus, they seem to be superior, at least in the Polish case.

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Bibliographic Info

Paper provided by International Association of Agricultural Economists in its series 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa with number 25889.

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Date of creation: 2003
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Handle: RePEc:ags:iaae03:25889

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Keywords: Agricultural Finance; Consumer/Household Economics;

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Cited by:
  1. Glauben, Thomas & Herzfeld, Thomas & Wang, Xiaobing, 2005. "Labor Market Participation of Chinese Agricultural Households," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24516, European Association of Agricultural Economists.

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