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The Effect Of Taxes On Labor Supply In Italy

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  • Colombino, Ugo
  • Del Boca, Daniela

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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File URL: http://econ.as.nyu.edu/docs/IO/9394/RR89-30.pdf
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Bibliographic Info

Paper provided by C.V. Starr Center for Applied Economics, New York University in its series Working Papers with number 89-30.

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Length: 40 pages
Date of creation: 1989
Date of revision:
Handle: RePEc:cvs:starer:89-30

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Postal: C.V. Starr Center, Department of Economics, New York University, 19 W. 4th Street, 6th Floor, New York, NY 10012
Phone: (212) 998-8936
Fax: (212) 995-3932
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Web page: http://econ.as.nyu.edu/object/econ.cvstarr.html
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Postal: C.V. Starr Center, Department of Economics, New York University, 19 W. 4th Street, 6th Floor, New York, NY 10012
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Related research

Keywords: labour supply ; labour market ; economic models ; taxes;

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Citations

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Cited by:
  1. repec:ese:iserwp:2000-11 is not listed on IDEAS
  2. 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, vol. 9(4), pages 415-433, December.
  3. Heim, Bradley T. & Meyer, Bruce D., 2004. "Work costs and nonconvex preferences in the estimation of labor supply models," Journal of Public Economics, Elsevier, vol. 88(11), pages 2323-2338, September.
  4. Fabrizio Colonna & Stefania Marcassa, 2013. "Taxation and labor force participation: the case of Italy," Questioni di Economia e Finanza (Occasional Papers) 191, Bank of Italy, Economic Research and International Relations Area.
  5. Anil Kumar, 2004. "Taxes, Deadweight Loss and Intertemporal Female Labor Supply: Evidence from Panel Data," Center for Policy Research Working Papers 61, Center for Policy Research, Maxwell School, Syracuse University.
  6. 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.
  7. Michiel Evers & Ruud A. de Mooij & Daniel J. van Vuuren, 2006. "What explains the Variation in Estimates of Labour Supply Elasticities?," Tinbergen Institute Discussion Papers 06-017/3, Tinbergen Institute.
  8. Stefania Marcassa & Fabrizio Colonna, 2011. "Taxation and Labor Force Participation: The Case of Italy," THEMA Working Papers 2011-22, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  9. Michael P. Keane, 2011. "Labor Supply and Taxes: A Survey," Journal of Economic Literature, American Economic Association, vol. 49(4), pages 961-1075, December.
  10. Carlin, Paul S. & Flood, Lennart, 1997. "Do children affect the labor supply of Swedish men? Time diary vs. survey data," Labour Economics, Elsevier, vol. 4(2), pages 167-183, June.

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