ISSN:
1435-8921
Keywords:
Key words: Heterogeneity in preferences, finite mixtures, female labor supply, taxes, tax simulation
;
JEL classification: J22, H24
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract. This paper expands the standard analysis of female labor supply to permit preference heterogeneity by using a finite mixture model. Using the extended model, we obtain theory consistent results whereas a traditional model produces a negative substitution effect. We use our model to illustrate the labor supply effects of a tax reform, corresponding to 1983–1992 changes in the Swedish income-tax schedule. The results shows an expected reduction in tax revenues of about 17%. Finally, we use Monte Carlo simulations and show that our proposed mixture model is robust towards different misspecifications.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/s001819900017
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