The impact of tax reforms on the labor supply of married women

John K Dagsvik (john.dagsvik@ssb.no), Fabio Montobbio, Marilena Locatelli, Emilia Soldani and Steinar Strøm (steinar.strom@econ.uio.no)

Department of Economics and Statistics Cognetti de Martiis. Working Papers from University of Turin

Abstract: We show how a neoclassical labor supply model with optimal decisions for labor force participation and hours of work, derived from first order conditions, can be taken to data even in the presence of a step-wise linear progressive tax system which may imply non-convex budget sets. The estimated model is used to simulate the optimal behavior when the tax system of 2001 is replaced by the less progressive tax system of 2006. The latter tax system implies a lower labor market participation among married women in Norway, a higher working load, given participation, and a more uneven distribution of household income.

Pages: 22 pages
Date: 2015-06
New Economics Papers: this item is included in nep-pbe
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