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The Impact of Tax-Benefit Reforms on Labor Supply in a Simulated Nash-bargaining Framework

Author

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  • Olivier Bargain

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, IZA - Institute for the Study of Labor)

  • Nicolas Moreau

    (CEMOI - Centre d'Économie et de Management de l'Océan Indien - UR - Université de La Réunion)

Abstract

Several theoretical contributions have suggested to model household behavior as a Nash-bargaining game. Yet very few attempts have been made to operationalize cooperative models of labor supply for policy analysis. In this paper, we implement a Nash-bargaining model with external threat points (divorce) into the microsimulation of tax-benefit policy reforms in France. The observation of divorced individuals is used to predict outside options and (some) of the preferences for individuals living in couples. Benchmark simulations are conducted in a way that guarantees consistency with the Nash bargaining setting, regularity conditions and observed behavior. We examine how the labor supply of couples adjusts to shocks on threat points, either hypothetical or generated by a radical tax-benefit reform.

Suggested Citation

  • Olivier Bargain & Nicolas Moreau, 2013. "The Impact of Tax-Benefit Reforms on Labor Supply in a Simulated Nash-bargaining Framework," Post-Print hal-01245264, HAL.
    • Handle: RePEc:hal:journl:hal-01245264
    DOI: 10.1007/s10834-012-9300-9
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    Cited by:

    1. Aaberge, Rolf & Colombino, Ugo & Perali, Federico, 2015. "A Centralized Approach to Modelling Collective Household Decisions: some preliminary results," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201505, University of Turin.
    2. Donni, Olivier & Molina, José Alberto, 2018. "Household Collective Models: Three Decades of Theoretical Contributions and Empirical Evidence," IZA Discussion Papers 11915, Institute of Labor Economics (IZA).
    3. José Alberto Molina & Jorge Velilla & Helena Ibarra, 2023. "Intrahousehold Bargaining Power in Spain: An Empirical Test of the Collective Model," Journal of Family and Economic Issues, Springer, vol. 44(1), pages 84-97, March.
    4. Heather H. Kelley & Ashley B. LeBaron & E. Jeffrey Hill, 2021. "Family Matters: Decade Review from Journal of Family and Economic Issues," Journal of Family and Economic Issues, Springer, vol. 42(1), pages 20-33, July.
    5. Ibarra, Helena & Velilla, Jorge, 2021. "Oferta laboral familiar y negociación intrafamiliar en España: Un test del modelo colectivo [Household labor supply and intrahousehold bargaining: An empirical test of the collective model]," MPRA Paper 108080, University Library of Munich, Germany.

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