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Market and Non-market Labor Supply and Recent German Tax Reform Impacts - Behavioral Response in a Combined Dynamic and Static Microsimulation Model

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  • Merz, Joachim

Abstract

This study on market and non-market labor supply and taxes is based on a theoretical microeconomic model with multiple labor supply in the formal and informal economy. This multiple time allocation model, which explicitly takes into account taxes, transfer payments, socioeconomic characteristics of the individual and the household, is specified in a multiple three-stage approach explaining the participation probability, the relevant wages and the hours of work in different activities. Uncompensated and compensated elasticities on market and non-market labor supply are computed. The estimates are based on data from the enlarged Sfb 3-Secondary Occupation Survey 1984, enlarged by tax and regional information for the economic situation and labor demand consideration. This microanalysis will follow the substantial question whether incentive or disincentive labor supply effects of the 1990 German tax reform are to be expected. The recent German Tax reform impacts are quantified by a combined dynamic and static microsimulation approach based on microeconometric estimated behavioral pattern representative for the Federal Republic of Germany.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 7235.

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Date of creation: Dec 1993
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Handle: RePEc:pra:mprapa:7235

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Keywords: behavioural effects;

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References

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  1. Burkhauser, Richard V. & Smeeding, Timothy M. & Merz, Joachim, 1994. "Relative Inequality and Poverty in Germany and the United States Using Alternative Equivalence Scales," MPRA Paper 16295, University Library of Munich, Germany.
  2. Lee, Lung-fei & Maddala, G S & Trost, R P, 1980. "Asymptotic Covariance Matrices of Two-Stage Probit and Two-Stage Tobit Methods for Simultaneous Equations Models with Selectivity," Econometrica, Econometric Society, vol. 48(2), pages 491-503, March.
  3. Hausman, Jerry A, 1985. "The Econometrics of Nonlinear Budget Sets," Econometrica, Econometric Society, vol. 53(6), pages 1255-82, November.
  4. Gronau, Reuben, 1977. "Leisure, Home Production, and Work-The Theory of the Allocation of Time Revisited," Journal of Political Economy, University of Chicago Press, vol. 85(6), pages 1099-1123, December.
  5. Gronau, Reuben, 1974. "Wage Comparisons-A Selectivity Bias," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1119-43, Nov.-Dec..
  6. de Kam, C. A. & de Haan, J. & Giles, C. & Manresa, A. & Berenguer, E. & Calonge, S., 1996. "Who pays the taxes?," MPRA Paper 7146, University Library of Munich, Germany.
    • C. A. de Kam & J. de Haan & C. Giles & A. Manresa & E. Berenguer & S. Calonge & J. Merz, 1996. "Who pays the taxes?," FFB-Discussionpaper 18, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
  7. Burtless, Gary & Hausman, Jerry A, 1978. "The Effect of Taxation on Labor Supply: Evaluating the Gary Negative Income Tax Experiments," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 1103-30, December.
  8. Merz, Joachim, 1994. "Microsimulation - A Survey of Methods and Applications for Analyzing Economic and Social Policy," MPRA Paper 7232, University Library of Munich, Germany.
  9. de Kam, C. A. & de Haan, J. & Giles, C. & Manresa, A. & Berenguer, E. & Calonge, S. & Merz, J. & Venkatarama, K., 1996. "The distribution of effective tax burdens in four EU countries," MPRA Paper 7144, University Library of Munich, Germany.
  10. Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-94, July.
  11. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  12. Pencavel, John, 1987. "Labor supply of men: A survey," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 1, pages 3-102 Elsevier.
  13. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132.
  14. Wagner, Joachim & Lorenz, Wilhelm, 1987. "The Earnings Function under Test," Hannover Economic Papers (HEP) dp-112, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  15. Killingsworth, Mark R. & Heckman, James J., 1987. "Female labor supply: A survey," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 2, pages 103-204 Elsevier.
  16. Joachim Merz, 1995. "MICSIM - Concept, Developments and Applications of a PC-Microsimulation Model for Research and Teaching," FFB-Discussionpaper 14, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
  17. Wales, T J & Woodland, A D, 1979. "Labour Supply and Progressive Taxes," Review of Economic Studies, Wiley Blackwell, vol. 46(1), pages 83-95, January.
  18. Wales, Terence J, 1973. "Estimation of a Labor Supply Curve for Self-Employed Business Proprietors," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(1), pages 69-80, February.
  19. Shishko, Robert & Rostker, Bernard, 1976. "The Economics of Multiple Job Holding," American Economic Review, American Economic Association, vol. 66(3), pages 298-308, June.
  20. Gronau, Reuben, 1980. "Home Production-A Forgotten Industry," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 408-16, August.
  21. Joachim Merz, 2001. "Informationsfeld Zeitverwendung - Expertise für die Kommission zur Verbesserung der informationellen Infrastruktur zwischen Wissenschaft und Statistik," FFB-Discussionpaper 29, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
  22. Flood, Lennart, 1988. "Effects of taxes on non-market work : The swedish case," Journal of Public Economics, Elsevier, vol. 36(2), pages 259-267, July.
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Cited by:
  1. Merz, Joachim, 1995. "MICSIM : Concept, Developments and Applications of a PC-Microsimulation Model for Research and Teaching," MPRA Paper 16029, University Library of Munich, Germany.
  2. Ulrich Widmaier & Hiltrud Niggemann & Joachim Merz, 1994. "What makes the Difference between Unsuccessful and Successful Firms in the German Mechanical Engineering Industry?," FFB-Discussionpaper 11, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.

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