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Collective Household Labor Supply: Nonparticipation and Income Taxation

By Olivier Donni, Université Laval, François Gardes, Guy Lacroix, Thierry Magnac, Costas Meghir and Nathalie Picard


In the present paper, we adopt the usual assumptions of the collective approach, i.e., individualism and efficiency, to study household labor supply. The theoretical innovation is twofold. Firstly, we incorporate in the initial setting the decision to participate to the labor market. Secondly, we abandon the assumption of linearity of the budget constraint. We show that (i) structural elements such as preferences or the outcome of the decision process can be recovered, (ii) testable restrictions are generated from the observation of the household labor supplies. In addition, we examine, for this model, how to simulate the incidence of fiscal reforms

Topics: Collective Models, Labor Supply, Income Taxation, Corner Solutions, Intra-household Distribution. J.E.L. Code, H31, J22
Year: 2003
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