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Hypothetical Tax-Benefit Reforms in Hungary: Shifting from Tax Relief to Cash Transfers for Family Support

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Listed:
  • Ana Agúndez García
  • Michael Christl

Abstract

This paper evaluates two hypothetical budget-neutral reforms that shift resources from family tax expenditures to family cash transfers. We evaluate these reforms using a structural labor supply model based on the microsimulation EUROMOD model and EU-SILC data. We find that both reforms have an inequality-decreasing impact. However, when looking at labor supply responses for different household types, we show that the reforms have a non-negligible impact, especially for females in couple households. Additionally, we show that females in the middle of the income distribution in particular reduce labor supply in response to the reforms.

Suggested Citation

  • Ana Agúndez García & Michael Christl, 2023. "Hypothetical Tax-Benefit Reforms in Hungary: Shifting from Tax Relief to Cash Transfers for Family Support," Eastern European Economics, Taylor & Francis Journals, vol. 61(6), pages 723-746, November.
    • Handle: RePEc:mes:eaeuec:v:61:y:2023:i:6:p:723-746
    DOI: 10.1080/00128775.2023.2221231
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    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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