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On the performance of unitary models of household labor supply estimated on “collective” data with taxation

Denis Beninger () and Francois Laisney ()
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Denis Beninger: Zentrum für Europäische Wirtschaftsforschung (ZEW), L7 1, D-68161 Mannheim, Germany

Cahiers d'Economie et Sociologie Rurales, 2006, vol. 81, 5-36

Abstract: This paper compares collective and unitary models on the basis of simulated collective data with income taxation. We distinguish the cases of individual and joint taxation. Estimating a flexible unitary model, we obtain strikingly different “preference” parameters depending on the type of taxation. We also obtain substantial differences between predicted adjustments to labor supply following a switch between tax regimes. Our results show that even the design of revenue-neutral reforms may be heavily distorted by the use of a unitary model on collective data. Finally, we discuss distortions affecting the welfare analysis of reforms on the basis of unitary estimates when the model generating the data is a collective model. The results suggest that increased efforts should be devoted to the estimation of collective models with taxation.

Keywords: Pareto optimal allocations; policy evaluation; simulated data (search for similar items in EconPapers)
Date: 2006
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Journal Article: On the performance of unitary models of household labor supply estimated on “collective” data with taxation (2006) Downloads
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