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A Welfare Evaluation of the 1986 Tax Reform for Married Couples in the United States

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  • Matteo PICCHIO

    () (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali)

  • Giacomo VALLETTA

    () (CORE - Universit‚ catholique de Louvain, Louvain-la-Neuve, Belgium)

Abstract

Abstract This paper evaluates the welfare effects of the 1986 Tax Reform Act (TRA86). We rely on different welfare metrics, which fully retain preference heterogeneity and are based on different ethical priors. We estimate utility functions with preference heterogeneity on the basis of structural models of family labor supply. Then, using these estimated preferences, we compute and compare different well-being rankings corresponding to different ways of measuring well-being. Finally, we identify the losers and the winners of TRA86, in absolute and relative terms, for each of the welfare metrics.
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Suggested Citation

  • Matteo PICCHIO & Giacomo VALLETTA, 2016. "A Welfare Evaluation of the 1986 Tax Reform for Married Couples in the United States," Working Papers 415, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  • Handle: RePEc:anc:wpaper:415
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    Keywords

    Welfare measures; discrete model; labor supply; preference heterogeneity; tax reform;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • 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

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