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Labour Supply, Commodity Demand and Marginal Tax Reform

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  • Madden, David

Abstract

This paper examines the implications of extending the Ahmad-Stern (1984) model of indirect tax reform to include labor supply. The inclusion of labor supply alters the basic measure of marginal revenue cost of indirect taxation and introduces the possibility of calculating a marginal revenue cost for direct taxation. The paper derives the expressions for these revised marginal revenue costs and provides estimates from Irish data. It then examines the sensitivity of the results to assumptions regarding functional form and, in particular, goods/leisure separability. Copyright 1995 by Royal Economic Society.

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  • Madden, David, 1995. "Labour Supply, Commodity Demand and Marginal Tax Reform," Economic Journal, Royal Economic Society, vol. 105(429), pages 485-497, March.
    • Handle: RePEc:ecj:econjl:v:105:y:1995:i:429:p:485-97
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    Cited by:

    1. Alessandro Santoro, 2007. "Marginal Commodity Tax Reforms: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 21(4), pages 827-848, September.
    2. West, Sara E. & Parry, Ian W.H., 2009. "Alcohol-Leisure Complementarity: Empirical Estimates and Implications for Tax Policy," National Tax Journal, National Tax Association;National Tax Journal, vol. 62(4), pages 611-633, December.
    3. Kaplanoglou, Georgia & Newbery, David Michael, 2003. "Indirect Taxation in Greece: Evaluation and Possible Reform," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(5), pages 511-533, September.
    4. Fred Schroyen, 2003. "An alternative way to model merit good arguments," UFAE and IAE Working Papers 595.03, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    5. Schroyen, Fred, 2005. "An alternative way to model merit good arguments," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 957-966, June.
    6. Mickael Beaud & Thierry Blayac & Patrice Bougette & Soufiane Khoudmi & Philippe Mahenc & Stéphane Mussard, 2013. "Estimation du coût d'opportunité des fonds publics pour l'économie française," Studies and Syntheses 14-01, LAMETA, Universtiy of Montpellier, revised Oct 2014.
    7. Odd E. Nygård & John T. Revesz, 2015. "Optimal indirect taxation and the uniformity debate: A review of theoretical results and empirical contributions," Discussion Papers 809, Statistics Norway, Research Department.
    8. West, Sarah E. & Williams III, Roberton C., 2007. "Optimal taxation and cross-price effects on labor supply: Estimates of the optimal gas tax," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 593-617, April.
    9. Paolo Liberati, 2001. "The Distributional Effects of Indirect Tax Changes in Italy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(1), pages 27-51, January.
    10. Jingjing Tong & Heather Nachtmann, 2017. "Cargo prioritization and terminal allocation problem for inland waterway disruptions," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 19(3), pages 403-427, August.
    11. Ranjan Ray, 1998. "The Design of Commodity Taxes in the Presence of Tax Evasion With Illustrative Evidence From India," Public Finance Review, , vol. 26(5), pages 503-518, September.
    12. Paolo Liberati, 2000. "Did VAT change redistribute purchasing power in Italy?," Working Papers in Public Economics 40, University of Rome La Sapienza, Department of Economics and Law.
    13. Shun-ichiro Bessho & Masayoshi Hayashi, 2013. "Estimating the Social Marginal Cost of Public Funds," Public Finance Review, , vol. 41(3), pages 360-385, May.
    14. Fred Schroyen, 2010. "Operational expressions for the marginal cost of indirect taxation when merit arguments matter," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(1), pages 43-51, February.

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