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Laffer curve in a non-Leviathan scenario: a real - effort experiment

Author

Listed:
  • Stefania Ottone

    (POLIS - University of Eastern Piedmont)

  • Ferruccio Ponzano

    (POLIS - University of Eastern Piedmont)

Abstract

The aim of this paper is to look for the presence of the Laffer curve in a non-Leviathan state using tax rates of 30%, 50% and 70%. We gave the players the opportunity to choose their labour supply both under a Welfare – State scenario and a State – of – Nature contract. The main evidence is that a tax rate of 70% is extremely unpopular and significantly decreases subjects' labour supply without any benefit on the tax revenue. On the other hand, an increase of the tax rate from 30% to 50% does not reduce the per capita labour supply while increasing the tax revenue.

Suggested Citation

  • Stefania Ottone & Ferruccio Ponzano, 2007. "Laffer curve in a non-Leviathan scenario: a real - effort experiment," Economics Bulletin, AccessEcon, vol. 3(48), pages 1-7.
    • Handle: RePEc:ebl:ecbull:eb-07c90003
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    References listed on IDEAS

    as
    1. Sutter, Matthias & Weck-Hannemann, Hannelore, 2003. "Taxation and the Veil of Ignorance--A Real Effort Experiment on the Laffer Curve," Public Choice, Springer, vol. 115(1-2), pages 217-240, April.
    2. Swenson, Charles W., 1988. "Taxpayer behavior in response to taxation: An experimental analysis," Journal of Accounting and Public Policy, Elsevier, vol. 7(1), pages 1-28.
    3. Ortona, Guido & Ottone, Stefania & Ponzano, Ferruccio & Scacciati, Francesco, 2008. "Labour supply in presence of taxation financing public services. An experimental approach," Journal of Economic Psychology, Elsevier, vol. 29(5), pages 619-631, November.
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    Cited by:

    1. Claudia Keser & David Masclet & Claude Montmarquette, 2020. "Labor Supply, Taxation, and the Use of Tax Revenues: A Real-Effort Experiment in Canada, France, and Germany," Public Finance Review, , vol. 48(6), pages 714-750, November.
    2. Stefania Ottone & Ferruccio Ponzano, 2011. "How people perceive the Welfare State: a real-effort experiment," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 58(2), pages 165-183, June.
    3. Ottone, Stefania & Ortona, Guido & Ponzano, Ferruccio & Scacciati, Francesco, 2010. "Some differences in revealed behaviour under different inquiry methods," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(5), pages 546-553, October.
    4. Carpenter, Jeffrey & Matthews, Peter Hans & Tabb, Benjamin, 2016. "Progressive taxation in a tournament economy," Journal of Public Economics, Elsevier, vol. 143(C), pages 64-72.
    5. Hamza Umer, 2018. "Fairness-Adjusted Laffer Curve: Strategy versus Direct Method," Games, MDPI, vol. 9(3), pages 1-14, August.
    6. Guenther, Isabel & Tetteh-Baah, Samuel Kofi, 2019. "The impact of discrimination on redistributive preferences and productivity: experimental evidence from the United States," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203652, Verein für Socialpolitik / German Economic Association.
    7. Hamza Umer, 2019. "Tax Framing and Productivity: evidence based on the strategy elicitation," Economics Bulletin, AccessEcon, vol. 39(1), pages 33-40.

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    More about this item

    Keywords

    Laffer;

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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