Is the Collective Model of Labor Supply Useful for Tax Policy Analysis? : A Simulation Exercise

Arbeitspapier

The literature on household behavior contains hardly any empirical research on the withinhousehold distributional effect of tax-benefit policies. We simulate this effect in the framework of a collective model of labor supply when shifting from a joint to an individual taxation system in France. We show that the net-of-tax relative earning potential of the wife is a significant determinant of intrahousehold negotiation but with very low elasticity. Consequently, the labor supply responses to the reform are entirely driven by the traditional substitution and income effects as in a unitary model. For some households only, the reform alters the intrahousehold distribution in a way that tends to change normative conclusions. A sensitivity analysis shows that the collective model would be required if the tax reform was both radical and of extended scope.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 1451

Classification and Topics

• Classification: Wirtschaft ; Fiscal Policies and Behavior of Economic Agents: Household ; Consumer Economics: Empirical Analysis ; Time Allocation and Labor Supply ; Consumer Economics: Theory ; Cooperative Games
• Subject: collective model ; intrahousehold allocation ; household labor supply ; tax reform ; Arbeitsangebot ; Haushaltsökonomik ; Familienökonomik ; Steuer ; Steuerreform ; Wirtschaftspolitische Wirkungsanalyse ; Theorie ; Frankreich

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bargain, Olivier ; Moreau, Nicolas
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/20750
• Last update: 10.03.2025, 11:43 AM CET