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The Impact of Tax-Benefit Reforms on Labor Supply in a Simulated Nash bargaining Framework

Author

Listed:
  • Nicolas Moreau

    (CEMOI - Centre d'Économie et de Management de l'Océan Indien - UR - Université de La Réunion)

  • Olivier Bargain

    (Larefi - Laboratoire d'analyse et de recherche en économie et finance internationales - UB - Université de Bordeaux)

Abstract

Several theoretical contributions, starting with McElroy and Horney (1981) and Manser and Brown (1980), have suggested to model househol d behavior as a Nash-bargaining game. Since then, very few attempts have been made to operationalize cooperative models of household labor supply for policy analysis. In this paper, we implement a Nash-bargaining model with external threat points (divorce) into the microsimulation of tax policy reforms in France. Following the suggestion of McElroy (1990) to achieve identification, we assume that the observation of single individuals can be used to predict outside options. Individual preferences in couples are allowed to display caring between spouses and are simulated in a way which guarantee consistency with the Nash bargaining setting, regularity conditions and observed behaviors. An extensive sensitivity analysis is provided in order to examine the various implications from using the cooperative model for tax policy analysis and the likely role of taxation on intra-household negotiation.

Suggested Citation

  • Nicolas Moreau & Olivier Bargain, 2013. "The Impact of Tax-Benefit Reforms on Labor Supply in a Simulated Nash bargaining Framework," Post-Print hal-01691912, HAL.
    • Handle: RePEc:hal:journl:hal-01691912
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    Cited by:

    1. Aaberge, Rolf & Colombino, Ugo & Perali, Federico, 2015. "A Centralized Approach to Modelling Collective Household Decisions: some preliminary results," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201505, University of Turin.
    2. Donni, Olivier & Molina, José Alberto, 2018. "Household Collective Models: Three Decades of Theoretical Contributions and Empirical Evidence," IZA Discussion Papers 11915, Institute of Labor Economics (IZA).
    3. Heather H. Kelley & Ashley B. LeBaron & E. Jeffrey Hill, 2021. "Family Matters: Decade Review from Journal of Family and Economic Issues," Journal of Family and Economic Issues, Springer, vol. 42(1), pages 20-33, July.
    4. Ibarra, Helena & Velilla, Jorge, 2021. "Oferta laboral familiar y negociación intrafamiliar en España: Un test del modelo colectivo [Household labor supply and intrahousehold bargaining: An empirical test of the collective model]," MPRA Paper 108080, University Library of Munich, Germany.
    5. José Alberto Molina & Jorge Velilla & Helena Ibarra, 2023. "Intrahousehold Bargaining Power in Spain: An Empirical Test of the Collective Model," Journal of Family and Economic Issues, Springer, vol. 44(1), pages 84-97, March.

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