Optimal Tax-Transfer Rules under Equilibrium and New Labour Demand Scenarios

Ugo Colombino and Nizamul Islam

No 13541, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We present an extension of the numerical approach to empirical optimal taxation allowed by a peculiar structure of a microeconometric model of labour supply that includes a representation of the demand side. This makes it possible to identify optimal tax-transfer rules while accounting for equilibrium constraints and to evaluate the effects of exogenous labour demand shocks. We provide illustrative examples using the 2015 EU-SILC data set for Italy.

Keywords: empirical optimal taxation; microsimulation; microeconometrics; evaluation of tax-transfer rules; equilibrium; labour demand shocks (search for similar items in EconPapers)
JEL-codes: C18 H21 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2020-07
New Economics Papers: this item is included in nep-eur, nep-pbe and nep-pub
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