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Optimal taxation with home production

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  • Conny Olovsson

    (Sveriges riksbank)

Abstract

Optimal taxes for Europe and the U.S. are derived in a realistically calibrated model where agents buy consumption goods and services, and use home capital and labor to produce household services. The optimal tax rate on services is substantially lower than the tax rate on goods. Specifically, the planner cannot tax home production directly and instead lowers the tax rate on market services to increase the relative price of home production. The optimal tax rate on the return to home capital is strictly positive, and the welfare gains from switching to optimal taxes are large.

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  • Conny Olovsson, 2014. "Optimal taxation with home production," 2014 Meeting Papers 598, Society for Economic Dynamics.
  • Handle: RePEc:red:sed014:598
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    1. Optimal taxation with home production
      by Christian Zimmermann in NEP-DGE blog on 2014-07-08 19:50:32

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    Cited by:

    1. Mocan, Naci, 2019. "Taxes and culture of leisure: Impact on labor supply in Europe," Journal of Comparative Economics, Elsevier, vol. 47(3), pages 618-639.
    2. Kammas, Pantelis & Sarantides, Vassilis, 2020. "Democratisation and tax structure in the presence of home production: Evidence from the Kingdom of Greece," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 219-236.
    3. Naci H. Mocan & Luiza Pogorelova, 2015. "Why Work More? The Impact of Taxes, and Culture of Leisure on Labor Supply in Europe," NBER Working Papers 21297, National Bureau of Economic Research, Inc.
    4. Matthew Greenblatt, 2020. "In-kind transfers and home production," Review of Economics of the Household, Springer, vol. 18(4), pages 1189-1211, December.
    5. Naci Mocan & Luiza Pogorelova, 2015. "Why Work More? The Impact of Taxes, and Culture of Leisure on Labor Supply in Europe," Koç University-TUSIAD Economic Research Forum Working Papers 1514, Koc University-TUSIAD Economic Research Forum.
    6. Mocan, Naci & Pogorelova, Luiza, 2015. "Why Work More? The Impact of Taxes, and Culture of Leisure on Labor Supply in Europe," IZA Discussion Papers 9281, Institute of Labor Economics (IZA).

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    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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