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Quadratic Utility, Labour Supply and The Welfare Effects of Tax Changes


  • Creedy, J.


1. Introduction 2. Labour Supply 3. The Slutsky Condition 4. Welfare Changes 4.1 The Expenditure Function 4.2 Compensating and Equivalent Variations 5. Numerical Examples 5.1 The Tax System 5.2 Utility and Labour Supply 6. Conclusions

Suggested Citation

  • Creedy, J., 2001. "Quadratic Utility, Labour Supply and The Welfare Effects of Tax Changes," Department of Economics - Working Papers Series 774, The University of Melbourne.
  • Handle: RePEc:mlb:wpaper:774 Note: This paper has now been published in: Creedy, J. (2001), Quadratic Utility, Labour Supply and the Welfare Effects of Tax Changes, Australian Journal of Labour Economics, 4, no.4, pp. 272-280.

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    References listed on IDEAS

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    3. Soskice, David, 1990. "Wage Determination: The Changing Role of Institutions in Advanced Industrialized Countries," Oxford Review of Economic Policy, Oxford University Press, vol. 6(4), pages 36-61, Winter.
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    5. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
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    7. Marta Campillo & Jeffrey A. Miron, 1997. "Why Does Inflation Differ across Countries?," NBER Chapters,in: Reducing Inflation: Motivation and Strategy, pages 335-362 National Bureau of Economic Research, Inc.
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    9. Lijphart, Arend & Crepaz, Markus M. L., 1991. "Corporatism and Consensus Democracy in Eighteen Countries: Conceptual and Empirical Linkages," British Journal of Political Science, Cambridge University Press, vol. 21(02), pages 235-246, April.
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    11. Cukierman, Alex & Webb, Steven B & Neyapti, Bilin, 1992. "Measuring the Independence of Central Banks and Its Effect on Policy Outcomes," World Bank Economic Review, World Bank Group, vol. 6(3), pages 353-398, September.
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    13. Robert J. Flanagan, 1999. "Macroeconomic Performance and Collective Bargaining: An International Perspective," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1150-1175, September.
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    Cited by:

    1. John Creedy & Nicolas Hérault & Guyonne Kalb, 2007. "Comparing Welfare Change Measures with Income Change Measures in Behavioural Policy Simulations," Melbourne Institute Working Paper Series wp2007n21, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    2. Creedy, J. & Kalb, G., 2001. "Measuring Welfare Changes With Nonlinear Budget Constraints in Continuous and Discrete Hours Labour Supply Models," Department of Economics - Working Papers Series 799, The University of Melbourne.

    More about this item



    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence


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