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: CESifo Working Paper ; No. 1052

Classification and Topics

• Classification: Wirtschaft
• Subject: collective model ; intrahousehold allocation ; household labor supply ; tax reform

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bargain, Olivier ; Moreau, Nicolas
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/76553
• Last update: 10.03.2025, 11:44 AM CET