Arbeitspapier
Labor income responds differently to income-tax and payroll-tax reforms
We estimate the responses of gross labor income with respect to marginal and average net-of-tax rates in France over the period 2003-2006. We exploit a series of reforms to the income-tax and payroll-tax schedules affecting individuals who earn less than twice the minimum wage. Our estimate for the elasticity of gross labor income with respect to the marginal net-of-income-tax rate is around 0.2, while we find no response to the marginal net-of-payroll-tax rate. The elasticity with respect to the average net-of-tax rate is not significant for the income-tax schedule, while it is close to -1 for the payroll-tax schedule. A plausible explanation is the existence of significant labor supply responses to the income-tax schedule, combined with sticky posted wages (i.e., the gross labor income minus payroll taxes divided by hours worked). Finally, the effect of the net-of-income-tax rate seems to be driven by participation decisions, in particular those of married women.
- Language
-
Englisch
- Bibliographic citation
-
Series: CESifo Working Paper ; No. 3974
- Classification
-
Wirtschaft
Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
Fiscal Policies and Behavior of Economic Agents: Household
Time Allocation and Labor Supply
Wages, Compensation, and Labor Costs: Public Policy
- Subject
-
labor income
payroll tax
income tax
Lohnsummensteuer
Einkommensteuer
Steuertarif
Steuerwirkung
Einkommen
Arbeitsangebot
Schätzung
Frankreich
- Event
-
Geistige Schöpfung
- (who)
-
Lehmann, Etienne
Marical, François
Rioux, Laurence
- Event
-
Veröffentlichung
- (who)
-
Center for Economic Studies and ifo Institute (CESifo)
- (where)
-
Munich
- (when)
-
2012
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Lehmann, Etienne
- Marical, François
- Rioux, Laurence
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2012
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