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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 = 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 - UQAM - Université du Québec à Montréal = University of Québec in Montréal)

  • C. Montmarquette

    (CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal = University of Québec in Montréal)

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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    More about this item

    Keywords

    labor supply; Laffer curve; real-effort experiment; redistribution; taxation;
    All these keywords.

    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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