Implementing a Dual Income Tax in Germany – Effects on Labor Supply and Income Distribution

Gerhard Wagenhals and Buck Jürgen ()
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Buck Jürgen: Lehrstuhl Statistik und Ökonometrie, Institut für Volkswirtschaftslehre 520 B, Universität Hohenheim, 70593 Stuttgart, Germany

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 2009, vol. 229, issue 1, 84-102

Abstract: Existing quantitative studies on the impact of a dual income tax on the German economy usually are based on computable general equilibrium models. They assume one representative household. Their results are sensitive to one behavioral parameter, the labor supply elasticity, which is assumed to be given exogenously. This paper presents a microeconometric evaluation of the labor supply and distribution effects of a dual income tax in Germany based on a representative sample of the German population.We observe small positive effects on labor supply and a small increase in economic inequality.

Keywords: Dual income tax; labor supply; microsimulation (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:jns:jbstat:v:229:y:2009:i:1:p:84-102

DOI: 10.1515/jbnst-2009-0106

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