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Income Taxation And Labor Force Participation In Transition Economies: Evidence From Bulgaria, Russian Federation And Serbia

Author

Listed:
  • Oybek Yuldashev
  • Obid Khakimov

    () (Westminster International University in Tashkent
    Westminster International University in Tashkent)

Abstract

This paper provides the evidence of the impact of income taxation on the labor force participation in three transition economies, namely, Bulgaria, Russian Federation and Serbia. The evidence suggests that countries which inherited high labor force participation rates are relatively insensitive to changes in the wage rates induced by the changes in the personal income taxation. The estimations have been performed using Heckman (1979) methodology and results showed relatively small wage elasticities of labor force participation for both men and women. In contrast, the sensitivity of the labor force participation decision to changes in wages is found to be bigger for females. The insensitivity of the labor force participation to changes in personal income taxation in all countries under the study may bear serious implications for tax policy design.

Suggested Citation

  • Oybek Yuldashev & Obid Khakimov, 2011. "Income Taxation And Labor Force Participation In Transition Economies: Evidence From Bulgaria, Russian Federation And Serbia," Anadolu University Journal of Social Sciences, Anadolu University, vol. 11(3), pages 177-198, September.
  • Handle: RePEc:and:journl:v:11:y:2011:i:3:p:177-198
    as

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    File URL: http://www.anadolu.edu.tr/arastirma/hakemli_dergiler/sosyal_bilimler/pdf/2011_3/2011-03-11.pdf
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    References listed on IDEAS

    as
    1. Bičáková, Alena & Slacalek, Jiri & Slavík, Michal, 2008. "Labor supply after transition: evidence from the Czech Republic," Working Paper Series 887, European Central Bank.
    2. Yuriy Gorodnichenko & Jorge Martinez-Vazquez & Klara Sabirianova Peter, 2009. "Myth and Reality of Flat Tax Reform: Micro Estimates of Tax Evasion Response and Welfare Effects in Russia," Journal of Political Economy, University of Chicago Press, vol. 117(3), pages 504-554, June.
    3. Richard Blundell & Alan Duncan & Costas Meghir, 1998. "Estimating Labor Supply Responses Using Tax Reforms," Econometrica, Econometric Society, vol. 66(4), pages 827-862, July.
    4. George C. Tsibouris & Vito Tanzi, 2000. "Fiscal Reform Over Ten Years of Transition," IMF Working Papers 00/113, International Monetary Fund.
    5. Blomquist, N. Soren, 1983. "The effect of income taxation on the labor supply of married men in Sweden," Journal of Public Economics, Elsevier, vol. 22(2), pages 169-197, November.
    6. D. Tondani, 2006. "Estimating the effects of personal income tax on labour supply in Italy," Economics Department Working Papers 2006-EP03, Department of Economics, Parma University (Italy).
    7. Alena Bièáková & Jiøí Slaèálek & Michal Slavík, 2011. "Labor Supply after Transition: Evidence from the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 61(4), pages 327-347, August.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Income taxation; Labor force participation; Labor supply; Heckman system of equations; Bulgaria; Russia; Serbia;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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