Is the collective model of labor supply useful for tax policy analysis ? A simulation exercise

Olivier Bargain and Nicolas Moreau

DELTA Working Papers from DELTA (Ecole normale supérieure)

Abstract: The literature on household behavior contains hardly any empirical research on the within-household distributional effect of tax-benefit policies. We simulate this effect in the framework of a collective model of labor supply when shifting from a joint to an individual taxation system in France. We show that the net-of-tax relative earning potential of the wife is a significant determinant of intrahousehold negotiation but with very low elasticity. Consequently, the labor supply responses to the reform are entirely driven by the traditional substitution and income effects as in a unitary model. For some households only, the reform alters the intrahousehold distribution in a way that tends to change normative conclusions. A sensitivity analysis shows that the collective model would be required if the tax reform was both radical and of extended scope.

New Economics Papers: this item is included in nep-lab
Date: 2002
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Related works:
Working Paper: Is the Collective Model of Labor Supply Useful for Tax Policy Analysis? A Simulation Exercise (2003)
Working Paper: Is the Collective Model of Labor Supply Useful for Tax Policy Analysis? A Simulation Exercise (2003)
Working Paper: Is the Collective Model of Labor Supply Useful for Tax Policy Analysis? A Simulation Exercise (2005)
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Persistent link: http://EconPapers.repec.org/RePEc:del:abcdef:2002-21

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