Labour Force Participation Elasticities: the Case of Slovakia

Matus Senaj, Zuzana Siebertova (), Norbert Svarda () and Jana Valachyova ()

Working Papers from Council for Budget Responsibility

Abstract: This paper provides a microeconometric analysis of extensive margin labour force participation elasticities in Slovakia. Using a fully parametric framework, a probability model for participation in labour force is estimated. Our results show that low-skilled and females are the groups that are particularly responsive to changes in income taxes and transfers. We perform a microsimulation of two counterfactual scenarios of abolition of the flat tax regime and we demonstrate that abolishing flat-tax regime may differ in the impact on labour participation decisions. We find out that recent departure from flat tax system in Slovakia reduces the average probability of being economically active only negligible at the extensive margin. More significant average effect is found in the hypothetical scenario with similar fiscal revenue impact, simulating a departure from flat-tax system by reintroducing five tax brackets. Finally, we show that the impact on selected subgroups of population is different.

Keywords: Labour force participation elasticity; Extensive margin; Micro-simulation; Flat-tax (search for similar items in EconPapers)
JEL-codes: H31 H53 I38 J21 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2016-06
New Economics Papers: this item is included in nep-cmp and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:cbe:wpaper:201601

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