LABOR SUPPLY, TAX EVASION AND THE MARGINAL COST OF PUBLIC FUNDS - AN EMPIRICAL-INVESTIGATION

• 成果类型: Article
• 署名作者: FORTIN, B; LACROIX, G
• 署名单位: Laval University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/0047-2727(93)01413-5
• 发表日期: 1994
• 页码: 407-431
• 关键词: tax evasion; marginal cost of public funds; labor supply; simulations

摘要

In this paper we extend the concept of marginal cost of public funds (MCF) to incorporate tax evasion in the labour market. MCF values are also computed from various tax reforms applied to the Province of Quebec (Canada 1985). For this purpose, a utility-based labour supply model that allows for both regular and irregular work activities is used. At the benchmark situation, the MCF associated with an increase in marginal income tax rates ranges between $1.39 and $1.53 depending upon whether we consider rationing or not. Moreover, the presence of the irregular sector accounts for between $0.02 and $0.05 of this MCF. Although small in magnitude, the impact of the irregular sector increases rapidly with the level of marginal tax rates.