IDEAS home Printed from https://ideas.repec.org/a/spr/jopoec/v13y2000i4p595-621.html
   My bibliography  Save this article

Labor supply responses and welfare effects from replacing current tax rules by a flat tax: Empirical evidence from Italy, Norway and Sweden

Author

Listed:
  • Ugo Colombino

    () (Department of Economics, University of Torino, via Po 53, 10128 Turin Italy)

  • Steinar Strøm

    () (Department of Economics, University of Oslo, P.O. Box 1095, Blindern, 0317 Oslo, Norway)

  • Rolf Aaberge

    () (Research Department, Statistics Norway 0033 Oslo, Norway)

Abstract

This paper employs a microeconometric framework to examine the labor supply responses and the welfare effects from replacing current tax systems in Italy, Norway and Sweden by a flat tax on total income. The flat tax rates are determined so that the tax revenues are equal to the revenues as of 1992. The flat tax rates vary from 23 per cent in Italy, 25 per cent in Norway, to 29 per cent in Sweden. In all three countries the labor supply responses decline sharply with pre-reform disposable income. The results show that the efficiency costs of the current tax systems relative to a flat tax may be rather high in Norway and much lower, but positive, in Italy and Sweden. In all three countries "rich" households - defined by their pre-tax-reform income - tend to benefit (in terms of welfare) more than "poor" households. In Italy and Sweden a majority will lose from a shift to a flat tax, while in Norway a majority is predicted to win.

Suggested Citation

  • 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.
  • Handle: RePEc:spr:jopoec:v:13:y:2000:i:4:p:595-621
    Note: Received: 19 May 1998/Accepted: 02 July 1999
    as

    Download full text from publisher

    File URL: http://link.springer.de/link/service/journals/00148/papers/0013004/00130595.pdf
    Download Restriction: Access to the full text of the articles in this series is restricted

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Labor supply; taxation; microeconometrics; cross-country analysis;

    JEL classification:

    • D19 - Microeconomics - - Household Behavior - - - Other
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jopoec:v:13:y:2000:i:4:p:595-621. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.