Is the Household Demand for In-Home Services Sensitive to Tax Reductions? The French Case
Our paper examines the impact of tax reductions on the demand for services in the home. For that purpose, we estimate a structural model of demand for such services by using household individual data collected by INSEE (Paris) in 1996. In this model, the net hourly wage paid to the domestic employee, the household preferences for consumption of in-home services and the decision to take advantage of the tax reduction are considered as endogenous variables. Estimation of the econometric model uses the fact that some households are observed to consume domestic services and to take advantage of the tax reduction, while others either consume such services but do not take advantage of the tax reduction, or do not consume these services at all. Its identification relies on an exclusion restriction resulting from the tax credit schedule. Results show that the probability of consuming in-home services increases with age and income. A ten per cent increase in the tax reduction would increase from 45.9 to 50.8 per cent the proportion of households benefiting from the tax reduction among those who consume paid in-home services. Moreover, 13.5 per cent of households who do not actually consume such services would do so after the ten per cent increase in the tax reduction. These simulated variations would mainly concern high-income households.
|Date of creation:||Nov 2004|
|Date of revision:|
|Publication status:||published in: Journal of Public Economics, 2007, 91 (1-2), 365-385|
|Contact details of provider:|| Postal: |
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nyman, John A & Bricker, Dennis L, 1989. "Profit Incentives and Technical Efficiency in the Production of Nursing Home Care," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 586-94, November.
- Gertler, Paul J & Waldman, Donald M, 1992. "Quality-Adjusted Cost Functions and Policy Evaluation in the Nursing Home Industry," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1232-56, December.
- Thomas Piketty, 1998. "L'emploi dans les services en France et aux États-Unis : une analyse structurelle sur longue période," Économie et Statistique, Programme National Persée, vol. 318(1), pages 73-99.
- Vassilis A. Hajivassiliou, 1991. "Simulation Estimation Methods for Limited Dependent Variable Models," Cowles Foundation Discussion Papers 1007, Cowles Foundation for Research in Economics, Yale University.
- Susan L. Averett & H. Elizabeth Peters & Donald M. Waldman, .
"Tax Credits, Labor Supply, and Child Care,"
University of Chicago - Population Research Center
92-9a, Chicago - Population Research Center.
- Didier Blanchet, 1994. "Transferts fiscaux, répartition du revenu et équilibre des emplois de service," Économie et Prévision, Programme National Persée, vol. 115(4), pages 85-91.
- David M. Blau & Alison P. Hagy, 1998. "The Demand for Quality in Child Care," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 104-146, February.
- Jean Kimmel, 1998. "Child Care Costs As A Barrier To Employment For Single And Married Mothers," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 287-299, May.
- Keane, Michael P, 1994. "A Computationally Practical Simulation Estimator for Panel Data," Econometrica, Econometric Society, vol. 62(1), pages 95-116, January.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp1392. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If references are entirely missing, you can add them using this form.