Joint Labour Supply of Married Couples: Efficiency and Distribution Effects of Tax and Labour Market Reforms
The paper presents a model of household labour supply that allows for simultaneous decisions of household members, complex and non-convex choice sets induced by tax and benefit rules, and quantity constraints on hours choice. The model is estimated using the 1993 Bank of Italy’s Survey of Household Income and Wealth, and used to simulate three hypothetical tax reforms: namely, a flat tax and two versions of a negative income tax system, under the constraint of equal tax revenue. All the reforms produce a larger household average disposable income, without worsening much the equality of the income distribution, and are supported by a majority of winners in the sample, although the proportion of winners varies considerably across income deciles. We also simulate the impact on labour supply and income of removing the quantity constraints on hours-wage packages available on the market, constraints that in Italy typically make full-time jobs more easily available than other jobs. The results show a considerable increase in participation among women belonging to relatively poor households, and a slight reductions in hours worked – given participation – across all households.
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.:
- Hausman, Jerry A, 1985. "The Econometrics of Nonlinear Budget Sets," Econometrica, Econometric Society, vol. 53(6), pages 1255-82, November.
- Bourguignon, F. & O'Donoghue, C. & Sastre-Descals, J. & Spadaro, A. & Utili, F., 1997.
"Eur 3: A Prototype European Tax-Benefit Model,"
DELTA Working Papers
97-30, DELTA (Ecole normale supérieure).
- Fortin, Bernard & Truchon, Michel & Beausejour, Louis, 1993.
"On reforming the welfare system : Workfare meets the negative income tax,"
Journal of Public Economics,
Elsevier, vol. 51(2), pages 119-151, June.
- Fortin, B. & Truchon, M., 1990. "On Reforming the Welfare System: Workfare Meets the Negative Income Tax," Cahiers de recherche 9016, Université Laval - Département d'économique.
- Ham, John C, 1982.
"Estimation of a Labour Supply Model with Censoring Due to Unemployment and Underemployment,"
Review of Economic Studies,
Wiley Blackwell, vol. 49(3), pages 335-54, July.
- John C. Ham, 1980. "Estimation of a Labour Supply Model with Censoring Due to Unemployment and Underemployment," Working Papers 521, Princeton University, Department of Economics, Industrial Relations Section..
- Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-94, July.
- Aaberge, Rolf & Dagsvik, John K & Strom, Steinar, 1995. " Labor Supply Responses and Welfare Effects of Tax Reforms," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 635-59, December.
- Blomquist, N. Soren, 1983. "The effect of income taxation on the labor supply of married men in Sweden," Journal of Public Economics, Elsevier, vol. 22(2), pages 169-197, November.
- Ilmakunnas, Seija & Pudney, Stephen, 1990. "A model of female labour supply in the presence of hours restrictions," Journal of Public Economics, Elsevier, vol. 41(2), pages 183-210, March.
- Arrufat, Jose Luis & Zabalza, Antonio, 1986. "Female Labor Supply with Taxation, Random Preferences, and Optimization Errors," Econometrica, Econometric Society, vol. 54(1), pages 47-63, January.
- Thomas MaCurdy & David Green & Harry Paarsch, 1990. "Assessing Empirical Approaches for Analyzing Taxes and Labor Supply," Journal of Human Resources, University of Wisconsin Press, vol. 25(3), pages 415-490.
- Daniel McFadden, 1977. "Modelling the Choice of Residential Location," Cowles Foundation Discussion Papers 477, Cowles Foundation for Research in Economics, Yale University.
- Colombino, Ugo, 1998. "Evaluating the effects of new telephone tariffs on residential users' demand and welfare. A model for Italy," Information Economics and Policy, Elsevier, vol. 10(3), pages 283-303, September.
- Dagsvik, John K, 1994. "Discrete and Continuous Choice, Max-Stable Processes, and Independence from Irrelevant Attributes," Econometrica, Econometric Society, vol. 62(5), pages 1179-1205, September.
- Moffitt, Robert, 1984. "The Estimation of a Joint Wage-Hours Labor Supply Model," Journal of Labor Economics, University of Chicago Press, vol. 2(4), pages 550-66, October.
- Hausman, Jerry & Ruud, Paul, 1984.
"Family Labor Supply with Taxes,"
American Economic Review,
American Economic Association, vol. 74(2), pages 242-48, May.
- Kapteyn, Arie & Kooreman, Peter & van Soest, Arthur, 1990.
"Quantity Rationing and Concavity in a Flexible Household Labor Supply Model,"
The Review of Economics and Statistics,
MIT Press, vol. 72(1), pages 55-62, February.
- Kapteyn, A.J. & Kooreman, P. & van Soest, A.H.O., 1989. "Quantity rationing and concavity in a flexible household labor supply model," Discussion Paper 1989-16, Tilburg University, Center for Economic Research.
- William T. Dickens & Shelly J. Lundberg, 1985.
"Hours Restrictions and Labor Supply,"
NBER Working Papers
1638, National Bureau of Economic Research, Inc.
- Aaberge, R. & Colombino, U. & Strom, S. & Wennemo, T., 1998. "Evaluating alternative tax reforms in Italy with a model of joint labor supply of married couples," Structural Change and Economic Dynamics, Elsevier, vol. 9(4), pages 415-433, December.
- Aaberge, Rolf & Colombino, Ugo & Strom, Steinar, 1999. "Labour Supply in Italy: An Empirical Analysis of Joint Household Decisions, with Taxes and Quantity Constraints," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(4), pages 403-22, July-Aug..
- Rolf Aaberge & Ugo Colombino, 1998. "Social Evaluation of Individual Welfare Effects from Income Taxation Empirical Evidence Based on Italian Data for Married Couples," Discussion Papers 230, Statistics Norway, Research Department.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpla:0501004. 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: (EconWPA)
If references are entirely missing, you can add them using this form.