Labour Force Participation Elasticities and Move Away from the Flat Tax: the Case of Slovakia

Norbert Svarda (), Jana Valachyova (), Matus Senaj and Zuzana Siebertova ()

No 41, Discussion Papers from Central European Labour Studies Institute (CELSI)

Abstract: This paper provides a microeconometric analysis of labour force participation elasticities in Slovakia. Using a fully parametric framework, a probability model for participation in labour force is estimated. Our results show that low-skilled and females are the groups that are particularly responsive to changes in income taxes and transfers. We perform a microsimulation analysis of two counterfactual scenarios of abolition of the flat tax regime. We find out that recent departure from the flat-tax system in Slovakia reduces the average probability of being economically active by 0.1 percentage points. The same average effect is found in the hypothetical scenario simulating a departure from the flat-tax system by reintroducing five tax brackets. However, we show that the impact of the two scenarios on selected subgroups of population is different.

Date: 2016-09-12
New Economics Papers: this item is included in nep-eur, nep-pbe and nep-tra
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Citations: View citations in EconPapers (8)

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Journal Article: Labour force participation elasticities and the move away from a flat tax: the case of Slovakia (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:cel:dpaper:41

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