Evaluating the Move to a Linear Tax System in Germany and Other European Countries

Denis Beninger (beninger@zew.de), Olivier Bargain, Miriam Beblo, Richard Blundell (r.blundell@ucl.ac.uk), Raquel Carrasco (raquel.carrasco@ucm.es), Maria Chiuri, Francois Laisney, Valérie Lechene (v.lechene@ucl.ac.uk), Ernesto Longobardi (ernesto.longobardi@uniba.it), Nicolas Moreau, Michal Myck, Javier Ruiz-Castillo and Frederic Vermeulen

Review of Economics of the Household, 2006, vol. 4, issue 2, 159-180

Abstract: This paper proposes a comparison of the results of tax policy analysis obtained on the basis of unitary and collective representations of the household. We first generate labour supplies consistent with the collective rationality, by use of a model calibrated on microdata as described in Vermeulen et al. [Collective Models of Household Labor Supply with Nonconvex Budget Sets and Nonparticipation: A Calibration Approach ( 2006 )]. A unitary model is then estimated on these collective data and unitary and collective responses to a tax reform are compared. We focus on the introduction of linear taxation in Germany. The exercise is replicated for other European countries and other topical reforms. Distortions due to the use of a unitary model turn out to be important in predicting labour supply adjustments, in the design of tax revenue neutral reforms, and in predicting a reform’s welfare implications. Copyright Springer Science+Business Media, LLC 2006

Keywords: Household labour supply; Intrahousehold allocations; Tax reform; JEL Classification; D11; D12; J22 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (14)

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Working Paper: Evaluating the Move to a Linear Tax System in Germany and Other European Countries (2008)
Working Paper: Evaluating the move to a linear tax system in Germany and other European countries (2006)
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DOI: 10.1007/s11150-006-0004-5

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