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Does Italy need family income taxation?

Author

Listed:
  • Arnstein Aassve

    () (Istituto Metodi Quantitavi Quantitativi, Università Bocconi)

  • Maria Grazia Pazienza

    () (Dipartimento Studi sullo Stato, Università degli Studi di Firenze)

  • Chiara Rapallini

    () (Dipartimento Studi sullo Stato, Università degli Studi di Firenze)

Abstract

The possible implications of using the family as opposed to the individual as the unit of taxation are not clear. This applies both to work incentives and distributional outcomes. In this paper we evaluate the effects of a hypothetical reform for Italian income taxation with respect to labour supply. In particular, we analyze potential labour supply effects by considering a shift from the current system of individual taxation to a system of family taxation similar to the French family splitting approach. The analysis is based on an econometric model of labour supply that is embedded in a tax–benefit model. Using data from the Bank of Italy Survey of Household Income and Wealth, our simulation results show relatively small effects on the total labour supply but a decrease in female labour supply.

Suggested Citation

  • Arnstein Aassve & Maria Grazia Pazienza & Chiara Rapallini, 2007. "Does Italy need family income taxation?," Working Papers 77, ECINEQ, Society for the Study of Economic Inequality.
  • Handle: RePEc:inq:inqwps:ecineq2007-77
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    File URL: http://www.ecineq.org/milano/WP/ECINEQ2007-77.pdf
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    Cited by:

    1. Colonna, Fabrizio & Marcassa, Stefania, 2012. "Taxation and Labor Force Participation: The Case of Italy," CEPREMAP Working Papers (Docweb) 1203, CEPREMAP.
    2. Fabrizio Colonna & Stefania Marcassa, 2015. "Taxation and female labor supply in Italy," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-29, December.
    3. Stefania Marcassa & Fabrizio Colonna, 2011. "Taxation and Labor Force Participation: The Case of Italy," THEMA Working Papers 2011-22, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.

    More about this item

    Keywords

    tax benefit system; fiscal reform; labour supply; microsimulation;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • 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
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General

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