Assessing the Impact of Tax and Transfer Policies on Labour Supply: A Survey

Changes in parameters of tax and transfer programs can induce individuals to alter their behaviour in a wide variety of ways, including changes in labour supply, in the nature of employee compensation, in the choice of working in the underground economy, in savings decisions, in human capital investments and in fertility decisions. The magnitude of these responses is of critical importance in the formulation of adequate tax and transfer policies. Thus the behavioural effects of income taxes and those implicit in means-tested transfer programs may strongly influence the impact of these policies on income, tax receipts, budgetary costs and welfare. In this paper, we abide with the tradition of evaluating the impact of tax and transfer programs on labour supply at both the extensive (the decision to work or not) and the intensive margins (the number of hours worked). We provide both a theoretical and empirical survey of the labour supply impact of tax and transfer programs. An important part of the empirical results discussed in this paper focuses on the labour supply impact of tax and transfer reforms that occurred in the US, in the UK and in Canada.

Tax Evasion and Social Interactions

The paper extends the standard tax evasion model by allowing for social interactions. In Manski's (1993) nomenclature, our model takes into account social conformity effects (i.e., endogenous interactions), fairness effects (i.e., exogenous interactions) and sorting effects (i.e., correlated effects). Our model is tested using experimental data. Participants must decide how much income to report given their tax rate and audit probability, and given those faced by the other members of their group as well as their mean reported income. The estimation is based on a two-limit simultaneous tobit with fixed group effects. A unique social equilibrium exists when the model satisfies coherency conditions. In line with Brock and Durlauf (2001b), the intrinsic nonlinearity between individual and group responses is sufficient to identify the model without imposing any exclusion restrictions. Our results are consistent with fairness effects but reject social conformity and correlated effects.social interactions; tax evasion; simultaneous tobit; laboratory experiments

Household Labor Supply, Sharing Rule and the Marriage Market

In this paper we estimate a model of household labor supply based on the collective approach developed by Chiappori (JPE, 1992). This approach assumes that the intra-household decision process leads to Pareto efficient outcomes. Our model extends this theory by allowing the marriage market, and especially the sex ratio, to affect the sharing rule and the household labor supplies. We show that our model imposes new restrictions on the parameters of the labor supply functions. Also, individual preferences and the sharing rule are recovered using an identification procedure that is both simpler and more robust than in Chiappori's initial approach. The model is estimated using PSID data for the year 1988. Our results do not reject the restrictions imposed by the model. Moreover, the sex ratio influences the sharing rule and the labor supply behavior in the directions predicted by the theory. Finally, the impact of individual wage rates suggests that spouses behave in an altruistic manner within the household.

Tax Evasion and Social Interactions

The paper extends the standard tax evasion model by allowing for social interactions. In Manski's (1993) nomenclature, our model takes into account social conformity effects (i.e., endogenous interactions), fairness effects (i.e., exogenous interactions) and sorting effects (i.e., correlated effects). Our model is tested using experimental data. Participants must decide how much income to report given their tax rate and audit probability, and given those faced by the other members of their group as well as their mean reported income. The estimation is based on a two-limit simultaneous tobit with fixed group effects. A unique social equilibrium exists when the model satisfies coherency conditions. In line with Brock and Durlauf (2001b), the intrinsic nonlinearity between individual and group responses is sufficient to identify the model without imposing any exclusion restrictions. Our results are consistent with fairness effects but reject social conformity and correlated effects.Social interactions, tax evasion, simultaneous tobit, laboratory experiments

Tax Evasion and Social Interactions

The paper extends the standard tax evasion model by allowing for social interactions. In Manski's (1993) nomenclature, our model takes into account social conformity effects (i.e., endogenous interactions), fairness effects (i.e., exogenous interactions) and sorting effects (i.e., correlated effects). Our model is tested using experimental data. Participants must decide how much income to report given their tax rate and audit probability, and given those faced by the other members of their group as well as their mean reported income. The estimation is based on a two-limit simultaneous tobit with fixed group effects. A unique social equilibrium exists when the model satisfies coherency conditions. In line with Brock and Durlauf (2001b), the intrinsic nonlinearity between individual and group responses is sufficient to identify the model without imposing any exclusion restrictions. Our results are consistent with fairness effects but reject social conformity and correlated effects.laboratory experiments; simultaneous Tobit; social interactions; tax evasion

Marriage Market, Divorce Legislation and Household Labor Supply

This paper provides a theoretical framework for analyzing the impact of the marriage market and divorce legislation on household labor supply. In our approach, the sex ratio on the marriage market and the rules governing divorce are examples of "distribution factors". The latter are defined as variables that affect the household members' bargaining position but neither preferences nor the joint budget set. We extend the collective labor supply model developed by Chiappori (JPE, 1992) to allow for distribution factors. We show that our model imposes new restrictions on the labor supply functions and eases the identification of individual preferences and the intra-household decision process. The model is estimated using PSID data for the year 1988. Our results do not reject the restrictions imposed by the model. Also, the sex ratio and divorce laws deemed favorable to women are found to impact the labor supply behavior and the decision process in the directions predicted by the theory and to have sizeable effects.Collective Model, Household Labor Supply, Marriage Market, Divorce Laws

Tax Evasion and Social Interactions

The paper extends the standard tax evasion model by allowing for social interactions. In Manski's (1993) nomenclature, our model takes into account endogenous interactions, i.e., social conformity effects, exogenous interactions, i.e., fairness effects, and correlated effects. Our model is tested using experimental data. Participants must decide how much income to report given individual and group tax rates and audit probabilities, and given a feedback on theother members' reporting behavior. Myopic and self-consistent expectations are considered in the analysis. In the latter case, the estimation is based on a two-limit simultaneous tobit with fixed group effects. A unique social equilibrium exists when the model satisfies coherency conditions. In line with Brock and Durlauf (2001b), the intrinsic nonlinearity between individual and group responses helps identify the model. Our results provide evidence of fairness effects but reject social conformity.laboratory experiments; simultaneous Tobit; social interactions; tax evasion

Localized approach to galvanic coupling in an aluminum–magnesium system

The corrosion behavior of a pure aluminum/pure magnesium couple in a weakly conductive sodium sulfate solution was investigated. Potential and current distributions on the surface of the model couple at the beginning of immersion were obtained by solving the Laplace equation using a finite element method algorithm. Magnesium acted as the anode of the system while oxygen and water were reduced on aluminum. Calculations predicted a large current peak at the Al/Mg interface related to a local increase in both Mg dissolution and oxygen and water reduction on aluminum, leading to a local pH increase. Optical and scanning electron microscope observations confirmed the strong dissolution of magnesium concomitantly with depassivation of aluminum at the Al/Mg interface. Local electrochemical impedance spectroscopy showed the detrimental effects of the galvanic coupling both on aluminum and magnesium

Are Children Decision-Makers Within the Household?

Children are seldom accounted for in household behavioural models. They are usually assumed to have neither the capacity nor the power to influence the household decision process. The literature on collective models has so far incorporated children through the "caring preferences" of their parents or has treated them as household public goods [Bourguignon (1999); Blundell et al. (2005)]. This paper seeks to determine whether children of a certain age are decision-makers. We focus on the decision-making process within households composed of two adults and one child of at least 16 years of age. We first summarize the main restrictions that have been proposed to test the collective model in the context of multiple decision-makers [Chiappori and Ekeland (2006)]. We also show how a minimal number of decision-makers can be inferred from parametric constraints. Second, we apply these tests on data drawn from a series of U.K. Family Expenditure Surveys. Our results show clear evidence that it may be incorrect to assume that daughters and children aged between 16 and 21 are not full members influencing the household decision-making process.intra-household allocation, collective household models, children, demand analysis, Pareto efficiency, rank tests

Simulating the galvanic coupling between S-Al2CuMg phase particles and the matrix of 2024 aerospace aluminium alloy

Study of the corrosion behaviour of a magnetron sputtered Al–Cu/Al–Cu–Mg model alloy couple in sulphate solutions has been undertaken to gain insight into the galvanic coupling between the matrix and SAl2CuMg particles in the 2024 aluminium alloy (AA2024). Polarisation curves and local electrochemical impedance spectroscopy measurements (LEIS) were performed on the individual alloys and on the model alloy couple. SEM enabled correlation of electrochemical phenomena to the observed damage. The corrosion behaviour of the sputtered alloys was shown to be representative of the AA2024, with the Al–Cu–Mg alloy part undergoing localised corrosion and the Al–Cu alloy part remaining passive