The Social Tax: Redistributive Pressure and Labor Supply
Eliana Carranza,
Aletheia Donald,
Florian Grosset-Touba and
Supreet Kaur
No 10155, Policy Research Working Paper Series from The World Bank
Abstract:
In low-income communities, pressure to share income with others may disincentivize work, distorting labor supply. This paper documents that across countries, social groups that undertake more interpersonal transfers work fewer hours. Using a field experiment, the study enabled piece-rate factory workers in Côte d'Ivoire to shield income using blocked savings accounts over 3-9 months. Workers could only deposit earnings increases, relative to baseline, mitigating income effects on labor supply. The study varied whether the offered account was private or known to the worker's network, altering the likelihood of transfer requests against saved income. When accounts were private, take-up was substantively higher (60% vs. 14%). Offering private accounts sharply increased labor supply—raising work attendance by 10% and earnings by 11%. Outgoing transfers did not decline, indicating no loss in redistribution. The estimates imply a 9–14% social tax rate. The welfare benefits of informal redistribution may come at a cost, depressing labor supply and productivity.
Date: 2022-08-30
New Economics Papers: this item is included in nep-exp, nep-lab and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)
Downloads: (external link)
http://documents.worldbank.org/curated/en/09974230 ... 37603d0554cfbe07.pdf (application/pdf)
Related works:
Working Paper: The Social Tax: Redistributive Pressure and Labor Supply (2022)
Working Paper: The Social Tax: Redistributive Pressure and Labor Supply (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:10155
Access Statistics for this paper
More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().