Labor Supply When Tax Avoidance Matters
AbstractWe examine how tax avoidance in the form of trade in well-functioning asset markets affects the empirical study of labor supply. We discuss the implications for tax policy analysis, and we show that a failure to account for avoidance responses may lead to huge errors when predicting how tax reform affects labor supply, tax revenue, and the welfare cost of taxation. In conclusion we argue that our model may explain a number of otherwise hard to understand dimensions of tax payer response.
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Bibliographic InfoPaper provided by Trade Union Institute for Economic Research in its series Working Paper Series with number 157.
Length: 34 pages
Date of creation: 28 Sep 1999
Date of revision:
Publication status: Published in European Journal of Political Economy, 2004, pages 963-982.
Labour supply; Tax avoidance; Asset markets; Tax reform simulation;
Find related papers by JEL classification:
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-01-24 (All new papers)
- NEP-LAB-2000-01-24 (Labour Economics)
- NEP-PBE-2000-01-24 (Public Economics)
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