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Income Taxation in an Empirical Collective Household Labour Supply Model with Discrete Hours

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  • Hans G. Bloemen

    (VU University Amsterdam)

Abstract

Most empirical studies on the impact of labour income taxation on the labour supply behaviour of households use a unitary modelling approach. In this paper we empirically analyze income taxation and the choice of working hours by combining the collective approach for household behaviour and the discrete hours choice framework with fixed costs of work. We identify the sharing rule parameters with data on working hours of both the husband and the wife within a couple. Parameter estimates are used to evaluate various model outcomes, like the wage elasticities of labour supply and the impacts of wage changes on the income sharing between husband and wife. We also simulate the consequences of a policy change in the tax system. We find that the collective model has different empirical outcomes of income sharing than a restricted model that imposes pooling of men's earnings and the household's non-labour income in the female's budget constraint. These differences in outcomes have consequences for the evaluation of a policy change in the tax system.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 10-010/3.

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Date of creation: 07 Jan 2010
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Handle: RePEc:dgr:uvatin:20100010

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Keywords: Labour supply; Household Behaviour; Collective Model; Taxation;

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References

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Citations

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Cited by:
  1. Tibor Hanappi & Sandra Müllbacher, 2012. "Tax Incentives and Family Labor Supply in Austria," NRN working papers 2012-12, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  2. André De Palma & Nathalie Picard & Ignacio Inoa, 2014. "Discrete Choice Decision-Making with Multiple Decision Makers within the Household," Working Papers hal-00969216, HAL.
  3. Nicole Bosch & Miriam Gielen & Egbert Jongen & Mauro Mastrogiacomo (DNB & CPB), 2013. "A structural analysis of labour supply elasticities in the Netherlands," CPB Discussion Paper 235, CPB Netherlands Bureau for Economic Policy Analysis.

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