Labour supply responses to income tax changes in Spain

Antonio Cutanda and Juan A. Sanchis
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Antonio Cutanda: Universidad de Valencia, Valencia, Spain. ORCID number: 0000-0003-2066-4632
Juan A. Sanchis: Universidad de Valencia and ERICES, Valencia, Spain. ORCID number: 0000-0001-9664-4668

No 2207, Working Papers from Department of Applied Economics II, Universidad de Valencia

Abstract: This paper simulates the response of the Spanish labour supply to income tax changes using estimates for the intertemporal elasticity of substitution of leisure. These elasticities are calculated using a pseudo-panel built combining information of the EPA and of the ECPF, from 1987 to 1997. Our findings suggest that income tax changes can have an impact on Spanish labour supply, though the effects would be minor. We also uncover that this labour response differs across men and women, as well as between permanent and fixed-term contract workers. And that the responses differ depending on the age of the worker.

Keywords: Labour Supply; Labour Income Tax; Intertemporal Elasticity of Substitution of Leisure; Simulations (search for similar items in EconPapers)
JEL-codes: E62 H24 H31 J22 (search for similar items in EconPapers)
Date: 2022-09
New Economics Papers: this item is included in nep-cmp, nep-his, nep-lma, nep-pbe and nep-pub
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