Household Labor Supply and Welfare Participation in Sweden

Lennart Flood, Jorgen Hansen and Roger Wahlberg
Additional contact information
Roger Wahlberg: University of Gothenburg

No 769, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper, we formulate and estimate a structural, static model of household labor supply and multiple welfare program participation. Given the complicated nature of both the income tax schedule and the benefit rules for different welfare programs, we use unique access to a very detailed micro-simulation model to generate accurate budget sets for each work-welfare combination. Moreover, when determining the budget sets, we use extraordinary high-quality data on earnings and other types of incomes, obtained both from employers and from income tax records. The results suggest that labor supply among two-parent families in Sweden is quite inelastic. A policy simulation designed to increase labor supply incentives for low income families generated substantial positive welfare effects, despite only minor increases in labor supply and decreases in welfare participation.

Keywords: unobserved heterogeneity; welfare; household labor supply (search for similar items in EconPapers)
JEL-codes: J2 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2003-04
New Economics Papers: this item is included in nep-eec and nep-ltv
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Citations: View citations in EconPapers (3)

Published - published in Journal of Human Resources, 2004, 39 (4), 1008-1032

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Related works:
Journal Article: Household Labor Supply and Welfare Participation in Sweden (2004)
Working Paper: Household Labour Supply and Welfare Participation in Sweden (2003)
Working Paper: Household Labor Supply and Welfare Participation in Sweden (1999)
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