Labor income responds differently to income-tax and payroll-tax reforms

• 成果类型: Article
• 署名作者: Lehmann, Etienne; Marical, Francois; Rioux, Laurence
• 署名单位: Universite Paris-Pantheon-Assas; Institut Polytechnique de Paris; ENSAE Paris
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2013.01.004
• 发表日期: 2013
• 页码: 66-84
• 关键词: Labor income; payroll tax; income tax

摘要

We estimate the responses of gross labor income with respect to marginal and average net-of-tax rates in France over the period 2003-2006. We exploit a series of reforms to the income-tax and payroll-tax schedules affecting individuals who earn less than twice the minimum wage. Our estimate for the elasticity of gross labor income with respect to the marginal net-of-income-tax rate is around 0.2, while we find no response to the marginal net-of-payroll-tax rate. The elasticity with respect to the average net-of-tax rate is not significant for the income-tax schedule, while it is close to -1 for the payroll-tax schedule. A plausible explanation is the existence of significant labor supply responses to the income-tax schedule, combined with sticky posted wages (i.e., the gross labor income minus payroll taxes divided by hours worked). Finally, the effect of the net-of-income-tax rate seems to be driven by participation decisions, in particular those of married women. (C) 2013 Elsevier B.V. All rights reserved.