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Labour Supply in Italy: An Empirical Analysis of Joint Household Decisions, with Taxes and Quantity Constraints

Rolf Aaberge (), Ugo Colombino () and Steinar Strøm

Journal of Applied Econometrics, 1999, vol. 14, issue 4, 403-22

Abstract: This study applies an econometric framework that allows for complex non-convex budget sets, highly nonlinear labour supply curves and imperfect markets with institutional constraints. A married couple's version of the model is estimated on Italian microdata. The empirical results show that male labour supply is rather inelastic while labour supply among females, especially participation, is considerably more elastic. The elasticities depend strongly on household income. The largest elasticities are found for females living in poor households. The results of the tax simulations suggest that there are only modest labour supply responses from replacing the 1987 system by proportional taxes.

Date: 1999
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Handle: RePEc:jae:japmet:v:14:y:1999:i:4:p:403-22