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The Structure of the Tax-system and the Estimation of Labor Supply Models

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  • Flood, Lennart

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

Abstract

Using a repeated cross section for married prime age Swedish males for the years 1984, 1986 and 1988 produce drastically different labor supply elasticities. From 1984 to 1988 the Swedish tax system has reduced both tax levels and degree of progressivity, the numbers of kink-points have dropped from 18 to only 3. The numbers of individuals close to or at a kink point have a large influence on the estimated parameters, more individuals close to a kink imply larger estimated incentive effects. More kinks in the tax system imply a higher probability of finding individuals close to a kink.

Suggested Citation

  • Flood, Lennart, 1998. "The Structure of the Tax-system and the Estimation of Labor Supply Models," Working Papers in Economics 1, University of Gothenburg, Department of Economics.
    • Handle: RePEc:hhs:gunwpe:0001
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    References listed on IDEAS

    as
    1. Brannas, Kurt & Karlsson, Niklas, 1996. "Estimating the perceived tax scale within a labor supply model," Economics Letters, Elsevier, vol. 52(1), pages 75-79, July.
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    Cited by:

    1. Hallberg, D., 2000. "Does Time-Use Data Support the Unitary Model? A Test using Swedish Time-Use Data from 1984 and 1993," Papers 2000:14, Uppsala - Working Paper Series.
    2. Schwierz, Christoph, 2003. "The Effects of Taxes and Socioeconomic Variables on Market Work and Home Production in Norway in the Years 1970 to 2000," Memorandum 33/2003, Oslo University, Department of Economics.

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    More about this item

    Keywords

    Labor supply and taxes; piece-wise linear taxes; kink points; differentiable approximation; Jacobean; measurement error; compensated elasticities.;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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