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Normative evaluation of tax policies: from households to individuals

Abstract

We simulate a hypothetical family tax credit on a sample of French couples, using jointly a collective model of labor supply and a tax-benefit calculator. Work behaviors represent here a general concept of “effort,” and hence, individual productivities cannot be assimilated with wage rates. They are retrieved by inversion of the optimal household program under simple assumptions on household preferences and bargaining rules. The calibrated model is used to predict incentive effects of the reform and distributive impacts on individuals and households. The desirability of the reform depends on which of these two welfare units is used for normative evaluation.

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Correspondence to Olivier Bargain.

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Responsible editor: Alessandro Cigno

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Bargain, O. Normative evaluation of tax policies: from households to individuals. J Popul Econ 21, 339–371 (2008). https://doi.org/10.1007/s00148-006-0091-x

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  • DOI: https://doi.org/10.1007/s00148-006-0091-x

Keywords

  • Collective model
  • Intrahousehold distribution
  • Tax reform

Jel Classification

  • D13
  • D31
  • H20