Arbeitspapier
Labor earnings respond differently to income-tax and to payroll-tax reforms
We estimate the responses of gross labor earnings 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 the payroll-tax schedules that affect individuals who earn less than twice the minimum wage. Our estimate for the elasticity of gross labor earnings 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 rates 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 a short-term rigidity of the hourly taxable wage (i.e. the gross wage minus payroll taxes), casting doubts about public finance analysis that assumes perfect competition on the labor market. Finally, the effect of the net-of-income-tax rate seems to be driven by labor supply participation decisions, in particular those of females.
- Language
-
Englisch
- Bibliographic citation
-
Series: IZA Discussion Papers ; No. 6108
- 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 earnings
payroll tax
income tax
Einkommen
Einkommensteuer
Lohnsteuer
Steuerreform
Steuerwirkung
Arbeitsangebot
Schätzung
Frankreich
- Event
-
Geistige Schöpfung
- (who)
-
Lehmann, Etienne
Marical, François
Rioux, Laurence
- Event
-
Veröffentlichung
- (who)
-
Institute for the Study of Labor (IZA)
- (where)
-
Bonn
- (when)
-
2011
- Handle
- URN
-
urn:nbn:de:101:1-201111213517
- Last update
-
10.03.2025, 11:45 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
- Institute for the Study of Labor (IZA)
Time of origin
- 2011
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