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While the descriptive impacts of the pandemic on women have been well documented in the aggregate, we know much less about the impacts of the pandemic on different groups of women. After controlling for detailed job and demographic characteristics, including occupation and industry, we find that the pandemic led to significant excess labor force exits among women living with children under age six relative to women without children. We also find evidence of larger increases in exits among lower-earning women. The presence of children predicted larger increases in exits during the pandemic among Latina and Black women relative to White women. Overall, we find evidence that pandemic induced disruptions to childcare, including informal care from family and friends. Our results suggest that the unique effect of childcare disruptions during the pandemic exacerbated pre-existing racial and income inequalities among women. [ABSTRACT FROM AUTHOR]

We examine how means-tested childcare subsidies affect parental labor supply. Using the introduction of reduced childcare prices for low-income families in Norway in 2015, we show that these subsidies may have the unintended effect of discouraging work rather than promoting employment. First, structural labor supply simulations suggest that a negative parental labor supply effect dominates, ex ante. Ex post, we find a small and insignificant effect of means-tested childcare subsidies on parental labor supply in the reform year. We find no statistically significant bunching around the income limits in subsequent years, but we do find negative labor supply effects in subsequent expansions of the reform. Our results suggest that in a context where both parental employment and participation in formal childcare are high, means-tested childcare subsidies may have unintended parental labor supply effects. [ABSTRACT FROM AUTHOR]

This paper studies how tax‐and‐transfer progressivity influences aggregate fluctuations when interacting with household heterogeneity. Using a simple static model of the extensive margin labor supply, we analytically characterize how a degree of progressivity influences differential labor supply responses to aggregate conditions across heterogeneous households. We then build a quantitative dynamic general equilibrium model with both idiosyncratic and aggregate productivity shocks and show that it delivers moderately procyclical average labor productivity and a large cyclical volatility of aggregate hours relative to output. Our quantitative exercises suggest that progressivity at the bottom of the income distribution shaped by the phasing out of transfers is key for these findings. Finally, we provide suggestive empirical evidence on the heterogeneity of employment responses across the wage distribution. [ABSTRACT FROM AUTHOR]

We compute participation tax rates across the EU and find that work disincentives inherent in tax–benefit systems largely depend on household composition and the individual's earner role within the household. We then estimate participation elasticities using an IV group estimator that enables us to investigate the responsiveness of individuals to work incentives. We contribute to the literature on heterogeneous elasticities by providing estimates for breadwinners and secondary earners separately, according to their potential earnings. Our results show an average participation elasticity of 0.0–0.1 among breadwinners and 0.1–0.4 among secondary earners in the EU as well as a high degree of heterogeneity across countries. [ABSTRACT FROM AUTHOR]

This paper explores the extent to which a negative health condition limits US young adults' participation in the labor market. We first rely on medical evidence to develop a new set of instruments for diabetes incorporating both socioeconomic and genetic information. Exploiting the variation in glycated hemoglobin ( H b A 1 c ), a measure of plasma glucose concentration available in Wave IV of the National Longitudinal Study of Adolescent to Adult Health (Add Health), we then empirically document no statistically significant effects of diabetes on employment probability among the Add Health sample. Subgroup results also yield no discernible patterns, with only some weakly significant and negative effects for the male and Hispanic subgroups. For further robustness checks, we relax an important yet untestable assumption in standard IV estimations to credibly bound the main effects of interest. By and large, the implications of diabetes on young adults' labor supply are less pronounced than what previous research implies. Our findings complement what is known about other populations, and lend support to the protective effects of parenting and the family environment on children's early-life labor market outcomes. To the extent that previous research has documented the negative effects of diabetes on employment among older adults, we provide some broader policy lessons that can be drawn from our IV estimates. [ABSTRACT FROM AUTHOR]

We estimate the effect of mobile money adoption on consumption smoothing, poverty, and human capital investments in Tanzania. We exploit the rapid expansion of the mobile money agent network between 2010 and 2012 and use this together with idiosyncratic shocks from variation in rainfall over time and across space in a difference-in-difference framework. We find that adopter households are able to smooth consumption during periods of shocks and maintain their investments in human capital. Results on time use of children and labor force participation complement the findings on the important role of mobile money for the intergenerational transmission of poverty. [ABSTRACT FROM AUTHOR]

This study measures the effect of tax–benefit policies on female labor supply based on a broad sample of 26 European countries in 2005–2010. The tax–benefit microsimulation model EUROMOD is used to calculate a measure of work incentives at the extensive margin—the participation tax rate, which is then used as the main explanatory variable in a female employment equation. This allows me to deal with the endogeneity of income in a new way by using a simulated instrumental variable based on a fixed EU-wide sample of women. The results suggest that a 10 percentage point increase in the participation tax rate decreases the female employment probability by 2.5 percentage points. The effect is higher for single mothers, for women in the middle of the skills distribution, and in countries that have lower rates of female employment. [ABSTRACT FROM AUTHOR]

In Italy, young adults tend to postpone their transition to adulthood and live with their parents until very late compared with other countries. A dynamic discrete choice model is proposed in which agents choose residential arrangements, together with labor supply and marital status, conditional on the economic and institutional framework and on other agents' choices. The model is structurally estimated with the Simulated Method of Moments for non-student high-school graduate males and then used to assess, through a variety of counterfactual experiments, the relative importance of factors that are claimed to influence the choice to leave home in the existing literature: labor market conditions, parental resources, housing market conditions and social interaction. Results suggest that Italians choose to remain with their parents due to a combination of poor labor market conditions and high housing costs. The relatively high income of parents could contribute to the patterns observed by acting as an insurance against unemployment. Finally, estimates indicate that individuals tend to conform to a social norm, especially in the South of the country were family ties and the costs in terms of utility from not complying with expected behaviors appear to be stronger. [ABSTRACT FROM AUTHOR]

Using a microsimulation model based on representative panel data, we analyze the outcomes of three major means-tested interdependent benefit programs that are available for low-income households in Germany with respect to benefit take-up and labor supply incentives. The results show a distinct overlap between the programs and high rates of non-take-up, indicating that the effectiveness of the programs in reaching their target groups could be improved. Furthermore, we find that workers from low-income households are confronted with a complex benefit structure and high marginal tax rates, which negatively affects the individual labor supply. [ABSTRACT FROM AUTHOR]

This paper presents the properties of optimal piecewise linear income tax systems for families, based on joint and individual incomes. It models the interaction between the wage rates of mothers as “second earners” and variation in child care prices and productivities as determinants of heterogeneity in second earner labour supply. We find that individual taxation welfare dominates joint taxation on grounds of both efficiency and equity. Heterogeneous labour supplies, the positive relationship between household wages and child care quality, and the sharp rise in wage rates in the top percentiles of the primary wage distribution account for this result. In addition to reducing the intra-household net-of-tax wage gap, individual taxation removes the opportunity for tax avoidance that income-splitting makes available to high-wage primary earners, leading to a much fairer distribution of the tax burden. [ABSTRACT FROM AUTHOR]

Most structural models for labour supply ignore the possibility of involuntary unemployment which may lead to biased behavioural responses. We estimate a structural model for labour supply without and with involuntary unemployment for the Netherlands. We find that average labour supply elasticities are only slightly lower in the model with involuntary unemployment than in the model without involuntary unemployment. The main reason for this small bias is the relatively small share of individuals who are involuntarily unemployed in our data period. A simulation of tax-benefit reforms confirms that the upward bias in average labour supply responses is limited in the model without involuntary unemployment. Hence, this study provides empirical evidence that the standard labour supply model, without rationing, gives a good prediction of the effects of tax reforms when the level of (involuntary) unemployment in a country is not too high. [ABSTRACT FROM AUTHOR]

This paper evaluates the welfare effects of the 1986 Tax Reform Act (TRA86). We rely on different welfare metrics, which fully retain preference heterogeneity and are based on different ethical priors. We estimate utility functions with preference heterogeneity on the basis of structural models of family labor supply. Then, using these estimated preferences, we compute and compare different well-being rankings corresponding to different ways of measuring well-being. Finally, we identify the losers and the winners of TRA86, in absolute and relative terms, for each of the welfare metrics. [ABSTRACT FROM AUTHOR]

Up to 1987 the Spanish Income Tax imposed compulsory joint filing for married couples. However, the 1988 reform allowed spouses to choose between joint and separate taxation, involving a reduction in tax rates for secondary earners. Our aim is to analyze this reform as a quasi-natural experiment, assessing the effects of tax changes on labor participation. To find out the causal effect we adopt the difference-in-differences technique. We use data from the ‘Spanish Income Tax Panel 1982-1998’. Our results show that, as a consequence of differential tax changes, married women in families more strongly affected by the fiscal reform increase their labor participation more than secondary earners from families less affected by the reform. The participation rate for secondary earners in the treatment group increases by 9.4 percentage points whereas the control group increases their participation rate by 7.8 percentage points. We define the treatment group as those secondary earners in relatively low-income families in year 1987 and the control group as those in middle-high income families, because the former experiences a stronger reduction in tax rates than the latter. As a result, we can attribute the 1.6-percentage-point-increase in participation rates to the 1988 income tax reform. [ABSTRACT FROM AUTHOR]

This paper studies the impact of targeted unconditional cash transfers on the spouses' demand for public goods, labor supplies and sharing of resources. We estimate a collective labor supply model with distributional factors which is extended to include preferences over marketable public goods (including child goods). In this way, unlike previous research, we consider the impact of such transfers on the intrahousehold allocation of resources and distinguish between the labeling and recipient effects. We exploit the UK experience and find evidence in favor of the collective model with separable preferences over labor supplies and public goods. This finding implies a recipient effect and not a labeling effect of child benefits. Given the household's unearned income, the bigger the wife's bargaining power, the more the resources allocated to public goods (including child goods) and the wife's private consumption. The results can be useful in the design of family policy which aims to improve the relative welfare of children within the family and alleviate any intrahousehold consumption inequalities. [ABSTRACT FROM AUTHOR]

We evaluate price subsidies and tax credits for childcare. We focus on partnered women's labour supply, household income and welfare, demand for childcare and government expenditure. Using Australian data, we estimate a joint, discrete structural model of labour supply and childcare demand. We introduce two methodological innovations - a more flexible quantity constraint that total formal and informal childcare hours are at least as large as the mother's labour supply and the explicit inclusion of maternal childcare in the utility function as a proxy for child development. We find that tax credits are more effective than subsidies in terms of increasing average hours worked and household income. However, tax credits disproportionately benefit wealthier and more educated women. Price subsidies, while less efficient, have positive redistributional effects. [ABSTRACT FROM AUTHOR]

Generous income support programs as provided by European welfare states have often been blamed to hamper employment. This paper investigates the importance of incentives inherent in the tax-benefit system for the individual decision to take up work. Using German microdata over the period 1993-2010, we find that recent reforms in Germany increased work incentives at the extensive margin measured by the participation tax rate (PTR), particularly for low-income individuals. Work incentives are even higher if the time horizon is extended to more than one year, pointing at an overestimation of the disincentives by standard measures. Regression analysis reveals that a decrease in the PTR increases the probability of taking up work significantly. [ABSTRACT FROM AUTHOR]

The family policy reform 2009 introduced tax deductibles for children and child care expenditures in Austria. In this paper we evaluate this reform based on a structural labor supply model with unitary households which has been estimated on the European Statistics on Income and Living Conditions cross-sections 2004-2008. We find that the reform had only small employment effects, most of them being generated through the introduction of a child care deductible. However, to illustrate the employment potential of a shift from universal child transfers to tax deductibles we propose additional simulations showing that such a policy shift would yield an increase in full time equivalents of approximately .70 % of overall employment, with married females increasing their labor supply by up to 1.5 %. While the proposed policy shifts have regressive effects in terms of their distributional impact, we show that phasing-out the tax deductible at higher income allows for the compensation of lower-income households without jeopardizing positive employment effects. [ABSTRACT FROM AUTHOR]

This article aims to estimate the elasticity of taxable income (ETI), taking into account the nature of transfers and their use as a redistribution package (involving cash and in-kind transfers) to households in Brazil. Our contributions are twofold. First, we provide a simple model with balanced-budget government that reveals the role played by cash and in-kind transfers on the labour supply (and income tax revenues thereof). Next, in order to estimate ETI in the presence of cash and in-kind transfers, Brazilian population surveys (Pesquisa Nacional por Amostra de Domicílios[PNAD]) are used to explore a limited tax reform that was implemented between 1997 and 1998. This reform only affected the higher income tax bracket. Our findings suggest that in-kind (cash) transfers are positively (negatively) associated with reported taxable income and precise estimation of ETI requires estimates of both types of transfers. Last, we estimate the ETI for Brazil in the range from 0.4 to 1.3 not different from those that maximize income tax revenues. [ABSTRACT FROM AUTHOR]

There is a huge variation in the size of labor supply elasticities in the literature, which hampers policy analysis. While recent studies show that preference heterogeneity across countries explains little of this variation, we focus on two other important features: observation period and estimation method. We start with a thorough survey of existing evidence for both Western Europe and the USA, over a long period and from different empirical approaches. Then, our meta-analysis attempts to disentangle the role of time changes and estimation methods. We highlight the key role of time changes, documenting the incredible fall in labor supply elasticities since the 1980s not only for the USA but also in the EU. In contrast, we find no compelling evidence that the choice of estimation method explains variation in elasticity estimates. From our analysis, we derive important guidelines for policy simulations. [ABSTRACT FROM AUTHOR]

This paper presents a structural labour supply model for the Netherlands. The model uses a large, rich data set which allows for precise estimates of labour supply elasticities for several subgroups. We use an advanced tax benefit calculator to calculate households' budget constraints accurately. Both the large, rich data set and the advanced tax benefit calculator enable us to perform more accurate policy predictions. Simulations show that labour supply elasticities differ among subgroups. Labour supply elasticities for men in couples are low but labour supply elasticities are much higher for cohabiting/married women. Furthermore, elasticities are relatively high for individuals with a lower education and/or non-Western background. Policy simulations provide two important insights. First, an introduction of either a pure flat tax, or an income-neutral flat tax, decreases aggregate labour supply. Second, an EITC for working parents is more effective in stimulating aggregate labour supply than an EITC for all workers or an overall reduction in marginal tax rates. [ABSTRACT FROM AUTHOR]

In the late 1990s, China aimed to mitigate environmental degradation from agricultural production activities by introducing the world's largest 'Payments for Environmental Servicesˮ program: the Sloping Land Conversion Program (SLCP). We develop a microeconomic Agricultural Household Model, which can model the production, consumption, and nonfarm labor supply decisions of agricultural households in rural China in a theoretically consistent fashion. Based on this theoretical model, we derive an empirical specification, which we econometrically estimate using the Hausman-Taylor method and a large longitudinal farm household data set. The empirical results significantly differ between regions, but are generally consistent with the results of our theoretical comparative static analysis, for example, that the SLCP significantly decreases agricultural production. While the SLCP only increases nonfarm labor supply and total consumption in some regions, these effects could not be observed in others. The recent reduction of the SLCP compensation payment rates generally had negligible effects on agricultural production and off-farm work and only very small effects on household consumption. [ABSTRACT FROM AUTHOR]

In a real-effort laboratory experiment, labor supply decreases more with the introduction of a tax than with a financially equivalent drop in wages. This “tax aversion” is large in magnitude: when we decompose the productivity decrease that arises from taxation, we estimate that 40% is due to the lower net wage and the remaining 60% to tax aversion. This tax aversion affects labor supply more on the extensive margin (working less) than on the intensive margin (being less productive while working). The aversion is equally strong whether tax revenue goes to the U.S. government or back to the experimenter (a “laboratory tax”). We discuss the implications of our results for the relationship between labor supply and taxation. [ABSTRACT FROM AUTHOR]

This article investigates the role of welfare receipt in shaping norms regarding work and welfare using unique Australian data from the Youth in Focus Project. We begin by incorporating welfare into a theoretical model of the transmission of work-welfare norms across generations. Consistent with the predictions of this model, we find evidence that youths' attitudes toward work and welfare may be influenced by socialization within their families. Young people are more likely to oppose generous social benefits and to believe that social inequality stems from individual characteristics if (i) their mothers support these views; (ii) their mothers were employed while they were growing up; and (iii) their families never received welfare. Finally, youths' work-welfare norms appear to be unrelated to their neighbors' welfare receipt suggesting that socialization occurs primarily within families rather than within neighborhoods. [ABSTRACT FROM AUTHOR]

In this paper, we present two alternative methods of accounting for changes in leisure time in decomposing the inequality effects of tax and transfer policy changes. Three components are identified: tax policy, labour supply responses to tax policy changes and other population effects. The methods are used to decompose inequality changes in Australia between 2001 and 2006. Inequality is first defined in non-welfarist terms as a function of disposable income: the independent judge places no value on leisure. Then, this is modified to allow for evaluations using a weighted geometric mean of disposable income and leisure. This is seen to modify the evaluation of changes in important ways. The results are found to differ from those obtained using a 'welfarist' evaluation in terms of money metric utility, where separate labour supply effects cannot be isolated. [ABSTRACT FROM AUTHOR]

We apply recently proposed individual welfare measures in the context of preference heterogeneity, derived from structural labour supply models. Contrary to the standard practice of using reference preferences and wages, these measures preserve preference heterogeneity in the normative step of the analysis. They also make the ethical priors, implicit in any interpersonal comparison, more explicit. Information on preference heterogeneity is obtained from a structural discrete choice labour supply model for married women estimated on microdata from the Socio Economic Panel in Germany. We construct welfare orderings of households according to the different metrics, each embodying different ethical choices concerning the treatment of preference heterogeneity in the consumption-leisure space and provide empirical evidence about the sensitivity of the welfare orderings to different normative principles. We also discuss how sensitive the assessment of a tax reform is to the choice of different metrics. [ABSTRACT FROM AUTHOR]

The paper studies how high-income taxpayers responded to the introduction of the 'extraordinary tax on individuals' in Hungary in 2007. The study is based on a panel of tax returns containing information on 10 % of tax filers from 2005 and three subsequent years. We estimate the elasticity of taxable income with respect to the marginal net-of-tax rate and find that the taxable income of Hungarian high earners is moderately responsive to taxation: the estimated elasticity is about 0.24. We also find evidence for a sizeable income effect. The estimated effect is not caused by income shifting. [ABSTRACT FROM AUTHOR]

This study proposes a method to obtain the social marginal costs of public funds (SMCF) that allows for heterogeneity on a household basis as well as labor supply responses along both the extensive and the intensive margins. To demonstrate our methodology, we take the example of the 1999 national income tax reform in Japan and evaluate it by estimating the SMCFs for changing marginal tax rates in different income brackets. We estimate the discrete choice model (DCM) of labor supply using a 1997 data set of Japanese households, and we use the estimates to generate the SMCFs with a DCM micro-simulation. We evaluate the simulated SMCFs with various distributional weights and find that the value of the SMCF for a 1 % increase in the marginal tax rate in any given income bracket decreases as we move across brackets from the bottom to the top. This finding suggests that the national government should have made the Japanese income tax system more progressive rather than less progressive as carried out in the 1999 reform. Our method is readily transferrable to tax reforms in other countries as well. [ABSTRACT FROM AUTHOR]

In this article, we estimate income and substitution labour supply and participation elasticities for Canadian married women using data from the Survey of Labour and Income Dynamics 1996–2005. We use the Canadian Tax and Credit Simulator (CTaCS) and detailed information on the structure of income at the household level to compute the marginal tax rates faced by each individual. We then use these marginal tax rates to compute net own-wage, spouse-wage, and nonlabour income. We show how the magnitude of the estimated elasticities varies depending on whether net or gross wages and income are used in the estimation procedure, and quantify biases caused by using average tax rates instead of marginal tax rates. Finally, because marginal tax rates vary significantly over the sample, we use quantile regressions to compare elasticities at different points of the hours distribution. Overall, our results show that public policies now have, on average, less scope for influencing hours of work than 10 years ago. However, the quantile results show that wives working fewer hours per week are more sensitive to changes in their own or spouses’ wages. [ABSTRACT FROM PUBLISHER]

Exploiting the exogenous variation in user fees caused by a Swedish childcare reform, we are able to identify the causal effect of childcare costs on fertility in a context in which childcare enrollment is almost universal, user fees are low, and labor force participation of mothers is very high. Anticipation of a reduction in childcare costs increased the number of first and higher-order births, but only seemed to affect the timing of second births. For families with many children we also find a marginally significant negative income effect on fertility. [ABSTRACT FROM AUTHOR]

In this paper, we examine the effects of labor income taxation on growth in an overlapping generations model in which schooling and childcare play a role in the production of human capital. We compare such effects with those obtained in a model in which only schooling matters for skill formation. We show that the omission of childcare from the technology of skill formation can bias the results related to the impact of labor income taxation on growth. [ABSTRACT FROM AUTHOR]

In this paper, we use the rapid introduction of an unconditional cash grant (child support) in South Africa to estimate the marginal propensity to consume and earn out of unearned income. We find that the marginal propensity to earn is about −0.3 and that the marginal propensity to consume is about 0.7. Nothing of the grant appears to be saved; if anything, households dissave against future grant payments. The marginal propensities estimated here are similar to those reported in comparable papers using US data. However, they stand in contrast to some results on conditional cash transfers in other developing countries. [ABSTRACT FROM AUTHOR]

This paper presents a micro-economic model to analyze intergenerational exchange in which the utility maximizing decisions of 'selfish' children on family services, labor market activities, and leisure are determined endogenously. We show that altruistic parents' financial transfers have a disincentive effect on the labor supply of their children and that the children's equilibrium income is positively correlated with parental income. Based on the theoretical model, we find that redistributing US$1 from children to their parents increases parental transfers by less than US$1, implying that intergenerational public transfers are Ricardian non-neutral. However, the non-neutral redistributive transfers may enhance intergenerational family bonds because the equilibrium levels of services rendered by children to their parents increase. [ABSTRACT FROM AUTHOR]

This paper reports estimates of the elasticity of taxable income with respect to the net-of-tax rate for New Zealand taxpayers. The relative stability of the New Zealand personal income tax system, in terms of marginal rates, thresholds and the tax base, provides helpful conditions for deriving these estimates. The elasticity of taxable income was estimated to be substantially higher for the highest income groups. Changes in the timing of income flows for the higher income recipients were found to be an important response to the announcement of a new higher rate bracket. The marginal welfare costs of personal income taxation were consistent across years, being relatively small for all but the higher tax brackets. For the top marginal rate bracket of 39 per cent, the welfare cost of raising an extra dollar of tax revenue was estimated to be well in excess of a dollar. Implications of the findings are that: disincentive effects of high top marginal rates can be substantial even when labour supply responses are small; the welfare costs of increases in top marginal tax rates can be high; and announcement effects of tax policy changes can lead to considerable income shifting between time periods. [ABSTRACT FROM AUTHOR]

Volunteering participation rates vary greatly across countries even when the potential volunteers' individual characteristics are controlled. We therefore analyze the volunteers' motives against the backdrop of the predominant political and economic environment in different countries, focusing on the state's role in influencing an individual's decision to volunteer. Combining individual-level data from the European and World Values Survey with macroeconomic and political variables for OECD countries, we identify three channels through which governmental activities influence voluntary labor: size of the state (i.e., amount of public social expenditure), political consensus between voters and the government, and government support for democratization. [ABSTRACT FROM AUTHOR]

This paper implements a relatively simple methodological approach to estimate the impact on family welfare of a specific tax reform. The measured impact can differ greatly from simple marginal tax rate comparisons, and conclusions about the distribution of the welfare impact can vary depending on the basis of comparison. For example, absolute welfare gains from the 2001 U.S. tax reform were concentrated among the highest and lowest income families, whereas welfare gains measured as a share of pre-tax income are found to be nearly monotonically declining in income. [ABSTRACT FROM AUTHOR]

In this paper we investigate how the possibility of (legal) tax avoidance affects the extent of (illegal) tax evasion and hence the shadow economy. We formulate a theoretical microeconomic model of household behavior in which households can participate in the official and in the shadow economy. Using comparative statics, we show that the complexity of the tax system affects participation in the shadow economy negatively, i.e. a more complex tax system with more possibilities of legal tax avoidance implies, ceteris paribus, a smaller labor supply in the shadow economy. In addition, we show that a reduction in the maximum admissible number of working hours in the official economy increases the labor supply in the shadow economy. [ABSTRACT FROM AUTHOR]

We study the optimal income taxation of couples. We determine the resulting intra-family labor supply allocation and its implication for the choice of the tax unit (individual versus joint taxation). We provide a general condition for full joint taxation to arise. We also study how the spouses' respective labor supply decisions are distorted when the condition does not hold. In particular, we show that, depending on the pattern of mating, the celebrated result according to which the spouse with the more elastic labor supply faces the lower marginal tax rates may or may not hold in our setting. [ABSTRACT FROM AUTHOR]

This paper focuses on the interaction between gender discrimination and household decisions. It develops a model with endogenous fertility, endogenous labor supply and endogenous size of government spending. Family policies which concern childcare services are assumed to reduce the time that parents spend on their children. The model shows that gender discrimination may explain differences in household decisions between countries. The solution shows a U-shaped relationship between fertility and gender discrimination if the quality of childcare services is sufficiently high. In the decreasing part of this U-shaped curve, a decrease in the discrimination level implies a related increase in fertility, women's participation in the labor force and in family-friendly policies. [ABSTRACT FROM AUTHOR]

Substantial evidence suggests that savings behavior may depart from neoclassical optimization. This article examines the implications of raising the savings rate-whether through social security, retirement plans, or otherwise-for labor supply, where labor supply is determined by behavioral utility functions that reflect the non-neoclassical character of savings behavior. Under one formulation, raising the targeted savings rate increases labor supply regardless of the slope of the labor supply curve; under a second, raising the targeted savings rate has the same effect on labor supply as that of raising the labor income tax rate; and under a third, raising the targeted savings rate has no effect on labor supply. Effects on labor supply are particularly consequential because of the significant preexisting distortion due to labor income taxation. [ABSTRACT FROM AUTHOR]

In recent decades, many 'Making Work Pay' policies have been implemented in OECD countries. These policies aim at improving the financial incentives for work, while maintaining high levels of social protection. Examples include the Earned Income Tax Credit in the USA and the Working Families' Tax Credit in the UK. While these policies are proven to be quite effective with respect to poverty alleviation, many worry that they may discourage labor supply on the intensive margin. We consider an alternative measure implemented in Belgium: the Workbonus, which subsidizes social security contributions for low-skilled workers. This program differs from other measures in that the eligibility and the level of the subsidy are based on full-time equivalent earnings. The instrument therefore distinguishes between low skill and low effort and avoids the above-mentioned disincentive effect. We assess the effects of the Workbonus on labor supply using a particular discrete-choice labor supply model, in which individuals are assumed to choose among jobs belonging to individual-specific latent choice sets. In particular, we compare the Workbonus with a tax credit system temporarily implemented in Belgium in 2001-2004. Results show that both measures have a positive impact on labor supply. However, the Workbonus is more efficient in terms of cost per additional full-time equivalent position created and avoids the 'part-time trap' implicit in the tax credit system. [ABSTRACT FROM AUTHOR]

This paper combines income and expenditure with time use data to provide a unique picture of the labor supply, household production, saving and consumption decisions of two-adult households over a life cycle defined in terms of the presence and ages of children. The study also draws on data for household borrowing and lending, direct and indirect benefits and taxes to calibrate a “family” life cycle model at the core of which is the hypothesis that households face a borrowing interest rate that rises with the amount of non-collateral based borrowing. The household members jointly choose time paths of time use, consumption and saving over their life cycle in the face of this capital market imperfection. Importantly, households are shown to differ significantly in their saving behavior in a way that depends on secondary earner labor supply, with a strong positive association between saving and the income of the second earner. The results differ sharply from those of the existing literature. [ABSTRACT FROM AUTHOR]

Using the Mirrlees optimal income tax model, with no income effects on labour supply, this article shows that the discrete population approach provides new insights into the characterization of the optimal tax system, which complements the previous findings. The analysis is based on the “Spence-Mirrlees wedge” which corresponds, at each observed gross income level, to a ratio between the marginal tax rate of the individual for whom the bundle is designed and that of his nearest more productive neighbour if he chooses to mimic. Using this wedge, a necessary and sufficient condition for bunching to be optimal is obtained in terms of the primitives of the model, separating optima are characterized geometrically, and comparative statics properties derived, notably with respect to skill levels and individual social weights. It is then shown that the analysis extends to adverse-selection problems where participation constraints replace the tax revenue constraint. [ABSTRACT FROM AUTHOR]

Many of the Australian family support schemes are income-tested transfers, targeted towards the lower end of the income distribution, whereas the Norwegian approach is to provide subsidized non-parental care services and universal family payments. We contrast these two types of policies and discuss policy changes within these policy types by presenting results from simulations, using microsimulation models developed for Australia and Norway. Labor supply effects and distributional effects are discussed for the hypothetical policy changes of replacing the means-tested family payments of Australia by the Norwegian universal child benefit schedule and vice versa, and of reducing the childcare fees in both countries. The analysis highlights that the case for policy changes is restricted by the economic environment and the role of family policy in the two countries. Whereas there is considerable potential for increased labor supply of Australian mothers, it may have detrimental distributional effects and is likely to be costly. In Norway, mothers already have high labor supply and any adverse distributional effects of further labor supply incentives occur in an economy with low initial income dispersion. However, expenditure on family support is already high and the question is whether this should be further extended. [ABSTRACT FROM AUTHOR]

This paper empirically analyzes the labor supply effects of two “making work pay” reforms in Germany. We provide evidence in favor of policies that distinguish between low effort and low productivity by targeting individuals with low wages rather than those with low earnings. We discuss our results more generally and with comparisons to the family-based tax credits in force in the US and the UK. For the evaluation of the policies, we apply a static structural labor supply framework and explicitly account for demand-side constraints by using a double-hurdle model. [ABSTRACT FROM AUTHOR]