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Labour Force Participation Elasticities and Move Away from the Flat Tax: the Case of Slovakia

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  • Norbert Švarda
  • Jana Valachyová
  • Matúš Senaj
  • Zuzana Siebertová

Abstract

This paper provides a microeconometric analysis of labour force participation elasticities in Slovakia. Using a fully parametric framework, a probability model for participation in labour force is estimated. Our results show that low-skilled and females are the groups that are particularly responsive to changes in income taxes and transfers. We perform a microsimulation analysis of two counterfactual scenarios of abolition of the flat tax regime. We find out that recent departure from the flat-tax system in Slovakia reduces the average probability of being economically active by 0.1 percentage points. The same average effect is found in the hypothetical scenario simulating a departure from the flat-tax system by reintroducing five tax brackets. However, we show that the impact of the two scenarios on selected subgroups of population is different.

Suggested Citation

  • Norbert Švarda & Jana Valachyová & Matúš Senaj & Zuzana Siebertová, 2016. "Labour Force Participation Elasticities and Move Away from the Flat Tax: the Case of Slovakia," Discussion Papers 41, Central European Labour Studies Institute (CELSI).
    • Handle: RePEc:cel:dpaper:41
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    2. Zuzana Siebertova & Norbert Svarda & Jana Valachyova, 2016. "Improving the Validity of Microsimulation Results: Lessons from Slovakia," International Journal of Microsimulation, International Microsimulation Association, vol. 9(2), pages 77-105.
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    Cited by:

    1. Norbert Švarda & Jana Valachyová & Matúš Senaj & Michal Horváth & Zuzana Siebertová, 2018. "The end of the flat tax experiment in Slovakia: An evaluation using behavioural microsimulation linked with a dynamic macroeconomic framework," Discussion Papers 50, Central European Labour Studies Institute (CELSI).
    2. Horváth, Michal & Senaj, Matúš & Siebertová, Zuzana & Švarda, Norbert & Valachyová, Jana, 2019. "The end of the flat tax experiment in Slovakia: An evaluation using behavioural microsimulation in a dynamic macroeconomic framework," Economic Modelling, Elsevier, vol. 80(C), pages 171-184.
    3. Matus Senaj & Zuzana Siebertova & Norbert Svarda & Jana Valachyova, 2018. "The Evaluation of Fiscal Consolidation Strategies," International Journal of Microsimulation, International Microsimulation Association, vol. 11(3), pages 39-58.
    4. Michal Horvath & Matus Senaj & Zuzana Siebertova & Norbert Svarda & Jana Valachyova, 2018. "Evaluating the Aggregate Effects of Tax and Benefit Reforms," Working Papers Working Paper No. 1/2018, Council for Budget Responsibility.
    5. Michal Horváth & Zuzana Siebertová, 2019. "Employment Effects of Income Tax Reforms: Lessons from Slovakia," Discussion Papers 54, Central European Labour Studies Institute (CELSI).
    6. Mihály Szoboszlai & Zoltán Bögöthy & Pálma Mosberger & Dávid Berta, 2018. "Assessment of the tax and transfer changes in Hungary between 2010 and 2017 using a microsimulation model," MNB Occasional Papers 2018/135, Magyar Nemzeti Bank (Central Bank of Hungary).

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    More about this item

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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