Volume 25, Number 3 (Summer) 1990
Colombino, Ugo and Daniela del Boca. 1990. "The Effect of Taxes on Labor Supply in Italy." Journal of Human Resources 25(3):390-414.
In this research we estimate a neoclassical household labor supply model for married individuals, incorporating the main elements of the tax system, using Italian microdata. We found that while the labor supply of women is rather elastic with respect to wages and income variation, men's labor supply is inelastic with respect to variation in both. We use these results to measure the behavioral and welfare effects of alternative tax systems: the actual tax system, where the unit of taxation is the individual; joint family taxation; and a flat tax. The simulation results show that relative to the actual system the joint tax implies a higher average social cost but is more equally distributed. The flat tax implies a lower social cost but is less equally distributed.
Ugo Colombino is a professor of economics in the department of economics science at the University of Salerno. Daniela Del Boca is a professor of economics at the Milan Polytechnic. They wish to thank James Heckman, the participants in the conference ,and two anonymous referees for very helpful comments and suggestions. They also wish to thank Christopher Flinn for helpful discussions. This research was partially funded by a grant from the National Research Council of Italy. The authors claim responsibility for errors and opinions.
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