Estimating the welfare cost of taxation in a labour market with Unemployment and non-participation

Vincent Hogan ()

No 199902, Working Papers from School of Economics, University College Dublin

Abstract: The standard public finance analysis of the welfare cost of labour income taxation is based on the estimation of labour supply functions that treat unemployed individuals as non-participants. This paper applies econometric models of multinomial discrete choice to the labour market, explicitly allowing individuals to be in any of three possible states (employment, unemployment and non-participation). Based on these estimates, we present calculations of the dead-weight loss of taxes, which turn out to be much larger than those suggested by the standard literature.

Keywords: Labor market--Econometric models; Taxation; Unemployment (search for similar items in EconPapers)
Date: 1999-02
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http://hdl.handle.net/10197/912 First version, 1999 (application/pdf)

Related works:
Working Paper: Estimating the Welfare Cost of Taxation in a Labour Market with Unemployment and Non-Participation (1999)
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