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Analysing Tax-Benefit Reforms in the Netherlands: Using Structural Models and Natural Experiments

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  • de Boer, Henk-Wim

    (Independent Researcher)

  • Jongen, Egbert L. W.

    (Leiden University)

Abstract

We combine the strengths of structural models and natural experiments in the analysis of tax-benefit reforms in the Netherlands. First we estimate structural discrete-choice models for labour supply. Next we simulate key past reforms and compare the predictions of the structural model with the outcomes of quasi-experimental studies. The structural model predicts the treatment effects well. The structural model then allows us to conduct counterfactual policy analysis. Policies targeted at working mothers with young children generate the largest labour supply responses, but generate little additional government revenue. Introducing a at tax, basic income or joint taxation is not effective.

Suggested Citation

  • de Boer, Henk-Wim & Jongen, Egbert L. W., 2020. "Analysing Tax-Benefit Reforms in the Netherlands: Using Structural Models and Natural Experiments," IZA Discussion Papers 12892, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12892
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    More about this item

    Keywords

    structural models; natural experiments; tax-benefit reform; Netherlands;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • 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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