Is the collective model of labor supply useful for tax policy analysis? a simulation exercise
By: by Olivier Bargain, Nicolas Moreau.
Contributors: Moreau, Nicolas
Series: Discussion paper ;; no. 1451; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) ;; no. 1451
Publisher: IZA
Published: 2005
Place of publication: Bonn, Germany
Language: eng
Format: Electronic resource
Subjects: Households -- Economic aspects -- France.; Resource allocation -- France.; Taxation -- France.
Description: "The literature on household behavior contains hardly any empirical research on the within-household distributional effect of tax-benefit policies. We simulate this effect in the framework of a collective model of labor supply when shifting from a joint to an individual taxation system in France. We show that the net-of-tax relative earning potential of the wife is a significant determinant of intrahousehold negotiation but with very low elasticity. Consequently, the labor supply responses to the reform are entirely driven by the traditional substitution and income effects as in a unitary model. For some households only, the reform alters the intrahousehold distribution in a way that tends to change normative conclusions. A sensitivity analysis shows that the collective model would be required if the tax reform was both radical and of extended scope"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Includes bibliographical references.
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