Abstract
We compare results of a tax reform analysis obtained with the collective and unitary models of household behaviour. We simulate real world micro-data by means of a collective approach, using a compound procedure of estimation and calibration based on the 1998 wave of the German socio-economic panel. We estimate a unitary model on this ‘collective’ data set. Investigating a move from joint to individual taxation on the basis of both models, we obtain important discrepancies between predicted adjustments to labour supply and distortions in the welfare analysis of the reform on the basis of unitary estimates.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Apps P, Rees R (1988) Taxation and the household. J Public Econ 35(3):355–369
Barmby T, Smith N (2001) Household labour supply in Britain and Denmark: some interpretations using a model of Pareto optimal behaviour. Appl Econ 33(39):1109–1116
Beblo M (2001) Die Freizeitlücke zwischen erwerbstätigen Müttern und Vätern—Ein ökonomischer Erklärungsversuch mit Daten der deutschen Zeitbudgeterhebung 1991/92. In: Ehling M, Merz J et al (eds) Zeitbudget in Deutschland—Erfahrungsberichte der Wissenschaft, vol. 17. Spektrum bundesstatistik, Wiesbaden
Beninger D (2003) Income taxation and the collective representation of the household: theory and empirical evidence. Ph.D. thesis, Université Louis Pasteur, Strasbourg
Beninger D, Laisney F (2002) Comparison between unitary and collective models of household labor supply with taxation. ZEW Discussion Paper 02-65, ZEW, Mannheim
Beninger D, Laisney F, Beblo M (2003) Welfare analysis of fiscal reforms: does the representation of the family decision process matter? Evidence for Germany. ZEW Discussion Paper 03-31, ZEW, Mannheim
Beninger D, Bargain O, Beblo M, Blundell R, Carrasco R, Chiuri MC, Laisney F, Lechene V, Myck M, Moreau N, Ruiz-Castillo J, Vermeulen F (2006) Evaluating the Move to a Linear Tax System in Germany and other European Countries. Review of Economics of the Household 4:159–180
Blundell R, Duncan A, Meghir C (1998) Estimating labour supply responses using tax reforms. Econometrica 66(4):827–861
Browning M, Chiappori PA, Lewbel A (2004) Equivalence scales based on collective household models. Mimeograph, Boston College, Chestnut Hills
Chiappori PA (1988) Rational household labor supply. Econometrica 56(1):63–89
Chiappori PA (1992) Collective labour supply and welfare. J Polit Econ 100(3):437–467
Creedy J, Kalb G (2005) Discrete hours labour supply modelling: specification, estimation and simulation. Research Paper 928, University of Melbourne
Donni O (2003) Collective household labor supply: nonparticipation and income taxation. J Public Econ 87(5–6):847–1334
Heckman J, Singer B (1984) A method for minimizing the impact of distributional assumptions in econometric models of duration data. Econometrica 52(2):271–320
Hoynes H (1996) Welfare transfers in two-parent families: labor supply and welfare participation under AFDC-UP. Econometrica 64(2):295–332
Jacobebbinghaus P, Steiner V (2003) Dokumentation des Steuer-Transfer-Mikrosimulationsmodells STSM. ZEW Dokumentation 03-06, Mannheim
Laisney F (ed) (2002) Final report on the EU Project “Welfare analysis of fiscal and social security reforms in Europe: does the representation of family decision processes matter?” Contract no: VS/2000/0776, Written for the European Commission, DG Employment and Social Affairs, Brussels
McFadden D, Train K (2000) Mixed MNL model for discrete response. J Appl Econ 15(5):447–470
Moreau N, Donni O (2002) Une estimation d'un modèle collectif d'offre de travail avec taxation. Ann Econ Stat 65:55–83
Myck M, Bargain O, Beblo M, Beninger D, Blundell R, Carrasco R, Chiuri MC, Laisney F, Lechene V, Moreau N, Ruiz-Castillo J, Vermeulen F (2006) Who receives the money matters: simulating the Working Families’ Tax Credit in the UK and some European tax reforms. Review of Economics of the Household 4:129–158
Statistisches Bundesamt (ed) (1995) Die Zeitverwendung der Bevölkerung: Ergebnisse der Zeitbudgeterhebung 1991/92. Tabellenbände I–IV
Statistisches Bundesamt (2003) Sozialhilfe in Deutschland: Entwicklung, Umfang, Strukturen. http://www.destatis.de/presse/deutsch/pk/2003/sozialhilfe_2003i.pdf
Van Soest A (1995) Structural models of family labor supply: a discrete choice approach. J Hum Resour 30(1):63–88
Vermeulen F, Bargain O, Beblo M, Beninger D, Blundell R, Carrasco R, Chiuri MC, Laisney F, Lechene V, Myck M, Moreau N, Ruiz-Castillo J (2006) Collective models of household labor supply with nonconvex budget sets and nonparticipation: a calibration approach. Review of Economics of the Household 4:113–127
Acknowledgements
We are grateful for comments and advice from Richard Blundell, Martin Browning, Pierre-André Chiappori, Valérie Lechene, Costas Meghir, Nathalie Picard, Frederic Vermeulen, and all participants in the one-year project “Welfare analysis of fiscal and social security reforms in Europe: does the representation of family decision processes matter?” This project was partly financed by the EU, General Directorate Employment and Social Affairs, under grant VS/2000/0778. Thanks also to Olivier Bargain, Stefan Boeters, Bernhard Boockmann, Hermann Buslei, Peter Jacobebbinghaus, Nicolas Moreau for careful reading of preliminary versions. The comments of an Editor and two anonymous referees are also gratefully acknowledged. All errors remain our own.
Author information
Authors and Affiliations
Corresponding author
Additional information
Responsible editor: Christian Dustmann
Appendix
Appendix
Estimation results for the unitary model
Rights and permissions
About this article
Cite this article
Beninger, D., Laisney, F. & Beblo, M. Welfare analysis of a tax reform for Germany: a comparison of the unitary and collective models of household labour supply. J Popul Econ 20, 869–893 (2007). https://doi.org/10.1007/s00148-006-0077-8
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s00148-006-0077-8