Does Taxation Affect Intrahousehold Distribution? A Simulation Approach

Olivier Bargain and Nicolas Moreau

A chapter in Inequality and Poverty, 2007, pp 317-344 from Emerald Group Publishing Limited

Abstract: The literature on household behavior contains hardly any empirical research on the within-household distributional effects 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 essentially 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 distributional effects captured by the collective model would be significant only for reforms both radical and of extended scope.

Date: 2007
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Working Paper: Does taxation affect intra-household distribution? A Simulation Approach (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eme:reinzz:s1049-2585(06)14015-6

DOI: 10.1016/S1049-2585(06)14015-6

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