Income Taxation in a Collective Household Labour Supply Model with Discrete Hours

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 19.07.2005, 12:15 - 13:30


Presentation by 

Hans Bloemen (Vrije Universiteit Amsterdam)


Most studies on the impact of labour income taxation on the labour supply behaviour of households use a unitary modelling approach. A discrete hours choice framework is increasingly used to model the choice of working hours by households or individuals. We extend on the empirical analysis of income taxation and hours choice by combining the collective approach for household behaviour and the discrete hours choice framework. Like in the continuous hours collective model, we are able to identify the parameters of the sharing rule, up to an additive constant, and the parameters of the utility functions. The collective approach imposes cross equation restrictions between the hours choice probabilities of husband and wife that we can test for. We use the model estimates to simulate the impact of changes in the income tax system on the hours choices of husband and wife.

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