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Family taxation and labour market participation incentives in Italy

Author

Listed:
  • Arnstein Aassve
  • Maria Grazia Pazienza
  • Chiara Rapallini

Abstract

The potential implications of using the family as opposed to the individual as the unit of taxation are not clear. This applies both to work incentives and distributional outcomes. In this paper we evaluate the effects of a hypothetical reform of Italian income taxation both on labour supply incentives and on redistribution of income between families with different composition and income levels. In particular, we analyze the potential effects of a shift from the current system of individual taxation to a system of family taxation similar to the French family-splitting approach by implementing a tax-benefit model. Based on data from the Bank of Italy Survey of Household Income and Wealth, our simulations show a reduction in the degree of progressivity and a disincentive for the labour supply of additional earners within the family.

Suggested Citation

  • Arnstein Aassve & Maria Grazia Pazienza & Chiara Rapallini, 2010. "Family taxation and labour market participation incentives in Italy," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 0(1-6), pages 189-217.
  • Handle: RePEc:fan:epepep:v:html10.3280/ep2010-001008
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    References listed on IDEAS

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    1. Del Boca, Daniela & Locatelli, Marilena, 2006. "The Determinants of Motherhood and Work Status: A Survey," IZA Discussion Papers 2414, Institute for the Study of Labor (IZA).
    2. Del Boca, Daniela & Sauer, Robert M., 2009. "Life cycle employment and fertility across institutional environments," European Economic Review, Elsevier, vol. 53(3), pages 274-292, April.
    3. Thomas A. DiPrete & S. Philip Morgan & Henriette Engelhardt & Hana Pacalova, 2003. "Do Cross-National Differences in the Costs of Children Generate Cross-National Differences in Fertility Rates?," Discussion Papers of DIW Berlin 355, DIW Berlin, German Institute for Economic Research.
    4. Maria Chiuri, 2000. "Quality and Demand of Child Care and Female Labour Supply in Italy," LABOUR, CEIS, vol. 14(1), pages 97-118, March.
    5. Daniela Del Boca, 2002. "The effect of child care and part time opportunities on participation and fertility decisions in Italy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 15(3), pages 549-573.
    6. Catapano, Cristina & Cesaroni, Tatiana & Fontana, Alessandro & Monacelli, Daniela, 2008. "L'individuazione di un benchmark per il fabbisogno di spesa dei comuni italiani: un'analisi per gruppi omogenei
      [The identification of a benchmark for the expenditure requirements of italian munici
      ," MPRA Paper 59865, University Library of Munich, Germany.
    7. Daniela Del Boca & Silvia Pasqua & Chiara Pronzato, 2005. "Fertility and Employment in Italy, France, and the UK," LABOUR, CEIS, vol. 19(s1), pages 51-77, December.
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    More about this item

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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