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Redistribution and labour supply

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  • Jorge Onrubia
  • Rafael Salas
  • José Sanz

Abstract

This paper explores the effect of personal income taxes on redistribution when labour supply reactions are taken into consideration. The results indicate that the classical non-behavioural results on redistribution are not necessarily satisfied in a more general behavioural framework. In this respect, it is shown that the relevant transition to measure redistribution is not the transition from the initial post-tax to the final post-tax income distribution, but rather from the more precise initial pre-tax to the final post-tax income distribution. In addition, the necessary and sufficient conditions to ensure redistribution in this wider setting are postulated, which helps determine the behavioural bias under alternative tax and labour supply models. This shows that the functional specification of labour supply may also affect the results. Copyright Springer 2005

Suggested Citation

  • Jorge Onrubia & Rafael Salas & José Sanz, 2005. "Redistribution and labour supply," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 3(2), pages 109-124, August.
    • Handle: RePEc:kap:jecinq:v:3:y:2005:i:2:p:109-124
    DOI: 10.1007/s10888-005-1087-6
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    References listed on IDEAS

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    1. 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 1103-1130, December.
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    3. Kakwani, Nanak C, 1977. "Applications of Lorenz Curves in Economic Analysis," Econometrica, Econometric Society, vol. 45(3), pages 719-727, April.
    4. Ugo Colombino & Steinar Strøm & Rolf Aaberge, 2000. "Labor supply responses and welfare effects from replacing current tax rules by a flat tax: Empirical evidence from Italy, Norway and Sweden," Journal of Population Economics, Springer;European Society for Population Economics, vol. 13(4), pages 595-621.
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    Cited by:

    1. Juan Prieto-Rodríguez & Víctor Fernández-Blanco, 2006. "Optimal pricing and grant policies for museums," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 30(3), pages 169-181, December.
    2. Carbonell-Nicolau, Oriol & Llavador, Humberto, 2018. "Inequality reducing properties of progressive income tax schedules: the case of endogenous income," Theoretical Economics, Econometric Society, vol. 13(1), January.
    3. Oriol Carbonell-Nicolau & Humberto Llavador, 2024. "Social Preorders and Tax Progressivity," Working Papers 1459, Barcelona School of Economics.
    4. Udo Ebert & Patrick Moyes, 2003. "Proportional income taxation and effective progressivity," Post-Print hal-00160174, HAL.
    5. Sara Torregrosa Hetland, 2015. "Did democracy bring redistribution? Insights from the Spanish tax system, 1960–90," European Review of Economic History, Oxford University Press, vol. 19(3), pages 294-315.
    6. Sara Torregrosa Hetland, 2014. "A fiscal revolution? Progressivity in the Spanish tax system, 1960-1990," Working Papers 2014/8, Institut d'Economia de Barcelona (IEB).
    7. Essama-Nssah, B., 2008. "Assessing the redistributive effect of fiscal policy," Policy Research Working Paper Series 4592, The World Bank.
    8. Juan Prieto-Rodríguez & Rafael Salas & Santiago Álvarez-García, "undated". "The Evolution Of Income Inequality In The European Union," Working Papers 10-02 Classification-JEL , Instituto de Estudios Fiscales.

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