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Encouragement and discouragement. Essays on taxation and government expenditure

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  • Kosonen, Tuomas

Abstract

This thesis consists of an introduction to a topic of optimal use of taxes and government expenditure and three chapters analyzing these themes more in depth. Chapter 2 analyses to what extent a given amount of subsidies affects the labour supply of parents. Municipal supplement to the Finnish home care allowance provides exogenous variation to labour supply decision of a parent. This kind of subsidy that is tied to staying at home instead of working is found to have fairly large effect on labour supply decisions of parents. Chapter 3 studies theoretically when it is optimal to provide publicly private goods. In the set up of the model government sets income taxes optimally and provides a private good, if it is beneficial to do so. The analysis results in an optimal provision rule according to which the good should be provided when it lowers the participation threshold into labour force. Chapter 4 investigates what happened to prices and demand when hairdressers' value added tax was cut in Finland from 22 per cent to 8 per cent. The pass-through to prices was about half of the full pass-through and no clear indication of increased demand for the services or better employment situation in the sector is found.

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  • Kosonen, Tuomas, 2011. "Encouragement and discouragement. Essays on taxation and government expenditure," Research Reports P57, VATT Institute for Economic Research.
    • Handle: RePEc:fer:resrep:p57
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    File URL: https://www.doria.fi/handle/10024/148892
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    Cited by:

    1. Harju Jarkko, 2014. "Policy evaluation methods in tax research – new evidence and interpretations," Nordic Tax Journal, Sciendo, vol. 2014(1), pages 76-92, May.
    2. Moisio, Antti, 2012. "Rethinking local government: Essays on municipal reform," Research Reports P61, VATT Institute for Economic Research.
    3. Korkeamäki, Ossi, 2012. "Essays on labour demand and wage formation," Research Reports P60, VATT Institute for Economic Research.

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