Evaluation of four tax reforms in the United States: Labor supply and welfare effects for single mothers

• 成果类型: Article
• 署名作者: Eissa, Nada; Kleven, Henrik Jacobsen; Kreiner, Claus Thustrup
• 署名单位: University of London; London School Economics & Political Science; Georgetown University; National Bureau of Economic Research; University of Copenhagen
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2007.08.005
• 发表日期: 2008
• 页码: 795-816
• 关键词: tax reform; labor supply; welfare analysis; single mothers; micro-simulation

摘要

An emerging consensus is that labor force participation is more responsive to taxes and transfers than hours worked. To understand the implications of participation responses for the welfare analysis of tax reform, this paper embeds this margin of labor supply in an explicit welfare theoretic framework. We apply the framework to examine the welfare effects on single mothers in the United States following four tax acts passed in 1986, 1990, 1993, and 2001. We propose a simulation method combining features of fully structural microsimulation studies and simple deadweight loss calculations. Our approach accounts for the observed heterogeneity in the microdata, but is simple to implement because we do not need to specify utility functions and estimate utility parameters. We find that each of the four tax acts created substantial welfare gains, and that the gains were concentrated almost exclusively on the participation margin. Our results imply that standard approaches not modeling the participation decision can make large errors. (c) 2007 Elsevier B.V. All rights reserved.