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Labour supply responses to income tax changes in Spain

Author

Listed:
  • Antonio Cutanda

    (Universidad de Valencia, Valencia, Spain. ORCID number: 0000-0003-2066-4632)

  • Juan A. Sanchis

    (Universidad de Valencia and ERICES, Valencia, Spain. ORCID number: 0000-0001-9664-4668)

Abstract

This paper simulates the response of the Spanish labour supply to income tax changes using estimates for the intertemporal elasticity of substitution of leisure. These elasticities are calculated using a pseudo-panel built combining information of the EPA and of the ECPF, from 1987 to 1997. Our findings suggest that income tax changes can have an impact on Spanish labour supply, though the effects would be minor. We also uncover that this labour response differs across men and women, as well as between permanent and fixed-term contract workers. And that the responses differ depending on the age of the worker.

Suggested Citation

  • Antonio Cutanda & Juan A. Sanchis, 2022. "Labour supply responses to income tax changes in Spain," Working Papers 2207, Department of Applied Economics II, Universidad de Valencia.
    • Handle: RePEc:eec:wpaper:2207
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    References listed on IDEAS

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    More about this item

    Keywords

    Labour Supply; Labour Income Tax; Intertemporal Elasticity of Substitution of Leisure; Simulations;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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