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What's Best for Women: Gender Based Taxation, Wage Subsidies or Basic Income?

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  • Colombino, Ugo

    ()
    (University of Turin)

  • Narazani, Edlira

    ()
    (University of Turin)

Abstract

We use a microeconometric model of household labour supply in order to evaluate, with Italian data, the behavioural and welfare effects of gender based taxation (GBT) as compared to other policies based on different optimal taxation principles. The comparison is interesting because GBT, although technically correct, might face implementation difficulties not shared by other policies that in turn might produce comparable benefits. The simulation procedure accounts for the constraints implied by fiscal neutrality and market equilibrium. Our results support to some extent the expectations of GBT's proponents. However it is not an unquestionable success. GBT induces a modest increase of women's employment, but similar effects can be attained by universal subsidies on low wages. When the policies are evaluated in terms of welfare, GBT ranks first among single women but for the whole population the best policies are subsidies on low wages, unconditional transfers or a combination of the two.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6828.

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Length: 29 pages
Date of creation: Aug 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6828

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Keywords: gender based taxation; wage subsidies; basic income; guaranteed minimum income; labour supply; social welfare;

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  1. John Creedy & Alan Duncan, 2001. "Aggregating Labour Supply And Feedback Effects In Microsimulation," Department of Economics - Working Papers Series, The University of Melbourne 823, The University of Melbourne.
  2. Peter A. Diamond & Emmanuel Saez, 2011. "The Case for a Progressive Tax: From Basic Research to Policy Recommendations," CESifo Working Paper Series 3548, CESifo Group Munich.
  3. Colombino Ugo, 2012. "Equilibrium simulation with microeconometric models. A new procedure with an application to income support policies," Department of Economics and Statistics Cognetti de Martiis. Working Papers, University of Turin 201209, University of Turin.
  4. Massimo Baldini & Stefano Toso & Paolo Bosi, 2002. "Targeting welfare in Italy: old problems and perspectives on reform," Fiscal Studies, Institute for Fiscal Studies, vol. 23(1), pages 51-75, March.
  5. Laurens CHERCHYE & Bram DE ROCK & Arthur LEWBEL & Frederic VERMEULEN, 2012. "Sharing rule identification for general collective consumption models," Center for Economic Studies - Discussion papers, Katholieke Universiteit Leuven, Centrum voor Economische Studiën ces12.05, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  6. Colombino, Ugo & Locatelli, Marilena & Narazani, Edlira & O'Donoghue, Cathal, 2010. "Alternative Basic Income Mechanisms: An Evaluation Exercise with a Microeconometric Model," IZA Discussion Papers 4781, Institute for the Study of Labor (IZA).
  7. Alesina, Alberto F & Ichino, Andrea & Karabarbounis, Loukas, 2007. "Gender Based Taxation and the Division of Family Chores," CEPR Discussion Papers 6591, C.E.P.R. Discussion Papers.
  8. Aaberge, Rolf & Colombino, Ugo & Strøm, Steinar, 2003. "Do More Equal Slices Shrink the Cake? An Empirical Investigation of Tax-Transfer Reform Proposals in Italy," Memorandum 37/2003, Oslo University, Department of Economics.
  9. Richard Blundell & Andrew Shephard, 2008. "Employment, hours of work and the optimal taxation of low income families," IFS Working Papers, Institute for Fiscal Studies W08/01, Institute for Fiscal Studies.
  10. Aaberge, Rolf & Colombino, Ugo & Strom, Steinar, 1999. "Labour Supply in Italy: An Empirical Analysis of Joint Household Decisions, with Taxes and Quantity Constraints," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 14(4), pages 403-22, July-Aug..
  11. Rolf Aaberge, 2006. "Gini’s Nuclear Family," Discussion Papers 491, Research Department of Statistics Norway.
  12. De Vincenti Claudio & Paladini Ruggero, 2009. "Personal Income Tax Design for Italy: Lessons from the Theory," Rivista italiana degli economisti, Società editrice il Mulino, issue 1, pages 7-46.
  13. Claudio DE VINCENTI & Ruggero PALADINI, 2009. "Personal Income Tax Design for Italy: Lessons from the Theory," Rivista Italiana degli Economisti, SIE - Societa' Italiana degli Economisti (I), vol. 14(1), pages 7-46, April.
  14. Rolf Aaberge & Ugo Colombino, 2011. "Empirical Optimal Income Taxation: A Microeconometric Application to Norway," CHILD Working Papers, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY wp16_11, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
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