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Labor Supply Prediction when Tax Avoidance Matters

Author

Listed:
  • Agell, Jonas

    (Department of Economics)

  • Persson, Mats

    (Institute for International Economic Studies)

  • Sacklén, Hans

    (Trade Union Institute for Economic Research)

Abstract

We examine how tax avoidance in the form of trade in well-functioning asset markets affects the empirical study of labor supply. We discuss the implications for tax policy analysis, and we show that a failure to account for avoidance responses may lead to huge errors when predicting how tax reform affects labor supply tax revenue, and the welfare cost of taxation. In conclusion we argue that our model may explain a number of otherwise hard to understand dimensions of tax payer response.

Suggested Citation

  • Agell, Jonas & Persson, Mats & Sacklén, Hans, 1999. "Labor Supply Prediction when Tax Avoidance Matters," Working Paper Series 1999:16, Uppsala University, Department of Economics.
  • Handle: RePEc:hhs:uunewp:1999_016
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    References listed on IDEAS

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    Cited by:

    1. Lars E. O. Svensson, 2000. "The First Year of the Eurosystem: Inflation Targeting or Not?," American Economic Review, American Economic Association, vol. 90(2), pages 95-99, May.
    2. Assar Lindbeck, 2002. "Pensions and Contemporary Socioeconomic Change," NBER Chapters, in: Social Security Pension Reform in Europe, pages 19-48, National Bureau of Economic Research, Inc.
    3. Arai, Mahmood & Thoursie, Peter Skogman, 2005. "Incentives and selection in cyclical absenteeism," Labour Economics, Elsevier, vol. 12(2), pages 269-280, April.
    4. Strauss, Tove, 2000. "Economic Reforms and the Poor," Working Paper Series 164, Trade Union Institute for Economic Research.
    5. Persson, Mats, 2000. "Five Fallacies in the Social Security Debate," Seminar Papers 686, Stockholm University, Institute for International Economic Studies.
    6. Strauss, Tove, 2000. "Structural Reforms, Uncertainty, and Private Investment," Working Paper Series 165, Trade Union Institute for Economic Research.

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    More about this item

    Keywords

    Labor supply; tax avoidance; asset markets; tax reform simulation;
    All these keywords.

    JEL classification:

    • 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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