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Welfare analysis of fiscal reforms in Europe: Does the representation of family decision processes matter? Evidence from Italy

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Author Info

  • Maria Concetta Chiuri

    (University of Bari)

  • Ernesto Longobardi

    () (University of Bari)

Abstract

This paper adopts a "piece-meal" approach to empirically identify, on a sample of Italian households, a collective model where both nonparticipation and non-convex budget sets are allowed for. Two tax reforms, i.e. the 2002 tax changes recently introduced in Italy and a revenue neutral linear income tax are evaluated by the collective framework derived. The predictions obtained for individual labour supplies, income and welfare distribution are then compared with those of a traditional unitary model. The exercise provide an assessment of the distortion introduced in positive and normative analyses when individuals are assumed to behave as if in a unitary, rather than in a collective world. The results suggest that further efforts should be devoted to the analysis of intra-household decision models.

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Bibliographic Info

Paper provided by Dipartimento di Scienze Economiche e Metodi Matematici - Università di Bari in its series series with number 0007.

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Length: 1171
Date of creation: Jan 2002
Date of revision: Jan 2002
Handle: RePEc:bai:series:wp0007

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Related research

Keywords: collective models; intra household allocation; tax reform;

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References

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  1. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-67, June.
  2. Tim Barmby & Nina Smith, 2001. "Household labour supply in Britain and Denmark: some interpretations using a model of Pareto Optimal behaviour," Applied Economics, Taylor and Francis Journals, vol. 33(9), pages 1109-1116.
  3. Laisney, François & Beninger, Denis & Beblo, Miriam, 2003. "Welfare Analysis of Fiscal Reforms: Does the Representation of the Family Decision Process Matter? Evidence for Germany," ZEW Discussion Papers 03-31, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
  5. Blundell, Richard & Chiappori, Pierre-André & Magnac, Thierry & Meghir, Costas, 2005. "Collective Labour Supply: Heterogeneity and Nonparticipation," IDEI Working Papers 373, Institut d'Économie Industrielle (IDEI), Toulouse.
  6. Frederic Vermeulen, 2001. "And the winner is... An empirical evaluation of two competing approaches to household labour supply," Public Economics Working Paper Series ces0123, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
  7. Laisney, François & Beninger, Denis, 2002. "Comparison between unitary and collective models of household labor supply with taxation," ZEW Discussion Papers 02-65, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
  9. Hoynes, Hilary Williamson, 1996. "Welfare Transfers in Two-Parent Families: Labor Supply and Welfare Participation under AFDC-UP," Econometrica, Econometric Society, vol. 64(2), pages 295-332, March.
  10. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
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Cited by:
  1. Bargain, Olivier & Moreau, Nicolas, 2006. "Effets d’une réforme fiscale sur l’offre de travail des ménages dans un cadre collectif simulé," L'Actualité Economique, Société Canadienne de Science Economique, vol. 82(1), pages 207-246, mars-juin.
  2. Bargain, Olivier & Beblo, Miriam & Beninger, Denis & Blundell, Richard & Carrasco, Raquel & Chiuri, Maria-Concetta & Laisney, François & Lechene, Valérie & Moreau, Nicolas & Myck, Michal & Ruiz-Cast, 2006. "Collective models of labor supply with nonconvex budget sets and nonparticipation : a calibration approach," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/4736, Universidad Carlos III de Madrid.
  3. Bargain, Olivier & Beblo, Miriam & Beninger, Denis & Blundell, Richard & Carrasco, Raquel & Chiuri, Maria-Concetta & Laisney, François & Lechene, Valérie & Moreau, Nicolas & Myck, Michal & Ruiz-Cast, 2006. "Does the representation of household behavior matter for welfare analysis of tax-benefit policies? : an introduction," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/4734, Universidad Carlos III de Madrid.

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