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Labor Supply, Taxation, and the Use of Tax Revenues: A Real-Effort Experiment in Canada, France, and Germany

Author

Listed:
  • C. Keser

    (Georg-August-University of Göttingen = Georg-August-Universität Göttingen)

  • David Masclet

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique, CIRANO - Centre interuniversitaire de recherche en analyse des organisations [Montréal, Canada] = Center for Interuniversity Research and Analysis on Organizations [Montréal, Canada])

  • C. Montmarquette

    (CIRANO - Centre interuniversitaire de recherche en analyse des organisations [Montréal, Canada] = Center for Interuniversity Research and Analysis on Organizations [Montréal, Canada])

Abstract

We experimentally investigated three variants of a real-effort game with taxation that differed in the degree of redistribution of tax revenue. Concretely, we compared a Leviathan scenario, where no tax is redistributed, with a situation where tax revenues are used to finance a public good involving neither a direct nor immediate monetary transfer to participants and with a scenario where direct transfer payments are made to each participant. Our results confirm previous findings of a nonlinear decreasing relationship between tax rate and work effort. We found that, for tax rates above 50 percent, the level of effort was highest under direct redistribution, followed by the public-good scenario, and by the Leviathan case. Conducting the experiment in Canada, France, and Germany, we observed average effort (and thus tax revenues) to be higher in France than in Canada and Germany. © The Author(s) 2020.

Suggested Citation

  • C. Keser & David Masclet & C. Montmarquette, 2020. "Labor Supply, Taxation, and the Use of Tax Revenues: A Real-Effort Experiment in Canada, France, and Germany," Post-Print hal-03004557, HAL.
    • Handle: RePEc:hal:journl:hal-03004557
    DOI: 10.1177/1091142120960491
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    Cited by:

    1. Katharina Pfeil & Matthias Kasper & Sarah Necker & Lars P. Feld, 2024. "Tax System Design, Tax Reform, and Labor Supply," CESifo Working Paper Series 11350, CESifo.
    2. Ingela Alger & Laura Juarez & Miriam Juarez-Torres & Josepa Miquel-Florensa, 2023. "Do Women Contribute More Effort than Men to a Real Public Good?," The World Bank Economic Review, World Bank, vol. 37(2), pages 205-220.
    3. Pfeil, Katharina & Kasper, Matthias & Necker, Sarah & Feld, Lars P., 2025. "Asymmetric labor supply responses to tax rate reform: Experimental evidence," Labour Economics, Elsevier, vol. 97(C).

    More about this item

    Keywords

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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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