Review of Economics of the Household

, Volume 4, Issue 2, pp 129–158

The Working Families’ Tax Credit and Some European Tax Reforms in A Collective Setting

Authors

  • Olivier Bargain
    • IZA
    • CHILD
  • Miriam Beblo
    • ZEW
  • Denis Beninger
    • ZEW
  • Richard Blundell
    • IFS
    • UCL
  • Raquel Carrasco
    • Universidad Carlos III
  • Maria-Concetta Chiuri
    • CHILD
    • Università di Bari
  • François Laisney
    • ZEW
    • BETA-ThemeULP
  • Valérie Lechene
    • IFS
    • Wadham College
  • Ernesto Longobardi
    • Università di Bari
  • Nicolas Moreau
    • GREMAQ and LIRHE
  • Javier Ruiz-Castillo
    • Universidad Carlos III
  • Frederic Vermeulen
    • Tilburg University
Article

DOI: 10.1007/s11150-006-0003-6

Cite this article as:
Myck, M., Bargain, O., Beblo, M. et al. Rev Econ Household (2006) 4: 129. doi:10.1007/s11150-006-0003-6

Abstract

A framework for simplified implementation of the collective model of labor supply decisions is presented in the context of fiscal reforms in the UK. Through its collective form the model accounts for the well known problem of distribution between wallet and purse, a broadly debated issue which has so far been impossible to model due to the limitations of the unitary model of household behavior. A calibrated data set is used to model the effects of introducing two forms of the Working Families’ Tax Credit. We also summarize results of estimations and calibrations obtained using the same methodology on data from five other European countries. The results underline the importance of taking account of the intrahousehold decision process and suggest that who receives government transfers does matter from the point of view of labor supply and welfare of household members. They also highlight the need for more research into models of household behavior.

Keywords

Collective modelsFiscal reformsHousehold labor supplyIntrahousehold allocation

JEL Classification

D11D12

Copyright information

© Springer Science+Business Media, LLC 2006