Normative evaluation of tax policies: from households to individuals

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.      

Banking on fewer children: financial intermediation,fertility and economic development

This paper shows that financial intermediation can influence fertility and labor allocation decisions by raising market wages. The increase in wages induces some households to abandon “traditional” labor intensive methods of production managed at the household level and supply labor to “modern” sector firms. Since it is optimal for households in the modern sector to have fewer children, the labor allocation decision leads to lower national fertility. A panel VAR using financial intermediation, fertility and industrial employment share data in 87 countries is estimated. The empirical results show that the data are consistent with the theoretical predictions. Received: 20 October 1997/Accepted: 31 August 1998     

Labor Migration,Remittances and Economic Well-being of Households in the Philippines

Labor Migration has long been viewed as a strategy adopted by the household unit to allocate family resources rationally to increase the flows of income and to raise family standard of living. The research reported here examines the extent to which remittances sent by Filipino overseas workers increase the income and standard of living of households in the Philippines. Data for the analysis were obtained from a representative sample of 2,388 households drawn in 1999–2000 from four major “labor sending” areas in the Philippines. The analysis compares households with and without overseas workers to estimate the contribution of remittances to household income and to household standard of living (measured once by an ‘objective’ indicator and once by a ‘subjective’ assessment). The data reveal that due to remittances the income of households with overseas labor migrants is considerably higher than the income of households without overseas workers. The data also reveal that remittances are used mostly for consumption purposes (e.g. purchase of food, clothing, education, and goods) and that most of the difference in standard of living (whether measured on the ‘objective’ or the ‘subjective’ scale) between households with and without overseas workers are attributed to remittances. The implications of labor migration and the policy that encourages and supports labor migration for the Filipino society are evaluated and discussed.

Reducing the excess burden of subsidizing the stork: joint taxation, individual taxation, and family tax splitting

Analyzing a homogenous household setting with endogenous fertility and endogenous labor supply, we demonstrate that moving from joint taxation to individual taxation and adapting child benefits so as to keep fertility constant entails a Pareto improvement. The change is associated with an increase in labor supply and consumption and a reduction of the marginal income tax, while the child benefit may move in either direction. Similarly, a move from joint taxation to some scheme of family tax splitting increases labor supply and welfare.     

Income taxation of couples and the tax unit choice

We study the optimal income taxation of couples. We determine the resulting intra-family labor supply allocation and its implication for the choice of the tax unit (individual versus joint taxation). We provide a general condition for full joint taxation to arise. We also study how the spouses’ respective labor supply decisions are distorted when the condition does not hold. In particular, we show that, depending on the pattern of mating, the celebrated result according to which the spouse with the more elastic labor supply faces the lower marginal tax rates may or may not hold in our setting.     

Trade, population growth, and the environment in developing countries

We examine pollution in a developing country where fertility is endogenous and wealth increases welfare through status. When the country has defective environmental laws, it has a comparative advantage in capital-intensive “dirty” goods. Gains from trade due to trade liberalization then increase income and boost population growth. With strong incentives to save, they also stimulate investment, which hampers population growth. Because population growth crowds out labor supply, production of capital-intensive dirty goods first increases and then decreases. This yields a typical environmental Kuznets path: pollution increases at the earlier stages but decreases at the later stages of development.     

“Making work pay” in a rationed labor market

This paper empirically analyzes the labor supply effects of two “making work pay” reforms in Germany. We provide evidence in favor of policies that distinguish between low effort and low productivity by targeting individuals with low wages rather than those with low earnings. We discuss our results more generally and with comparisons to the family-based tax credits in force in the US and the UK. For the evaluation of the policies, we apply a static structural labor supply framework and explicitly account for demand-side constraints by using a double-hurdle model.     

Do more equal slices shrink the cake? An empirical investigation of tax-transfer reform proposals in Italy

A crucial issue in efficiency-equality evaluations of tax reforms resides in the possibility that the level as well as the distribution of welfare may change, where the household-specific measures of welfare capture the value of income as well as the value of leisure. A better-designed redistribution and income support system may not only foster equality but also improve the configuration of incentives and by this route contribute in its turn to efficiency. This paper presents an empirical analysis of the welfare effects for married couples of replacing the Italian tax system by three alternative hypothetical reforms: a flat tax, a negative income tax, and a work fare scheme. We employ a microeconometric model of household labour supply that represents partners simultaneous choices, allows for constraints in the choice of hours of work, and is sufficiently flexible to capture a large variety of supply responses. These features appear to be crucial in the evaluation of reform effects. The results suggest that there is scope for improving upon the current system under both the efficiency and the equality criterion. The benefits from the reforms, however, come from unexpected directions since the largest labour supply contribution come from poor and middle class households whereas rich households appear to be much less responsive to changes in the tax rates. The simulation results reveal that a crucial role in shaping the results is played by the relatively higher behavioural responsiveness of married women living in low and average income households.All correspondence to Ugo Colombino. We would like to thank Tom Wennemo for skilful programming assistance, Anne Skoglund for technical assistance and word processing, K.A. Breke and E. Holmøy and an anonymous referee for useful comments. Special thanks to Dino Rizzi (University of Venezia), who provided us with a program written by him for the simulation of the direct and inverse 1993 tax-transfer rules (Rizzi 1996). Part of the paper was written when Aaberge and Strøm were visiting ICER and the Department of Economics in Torino. ICER is gratefully acknowledged for providing financial support and excellent working conditions. Ugo Colombino gratefully acknowledges financial and organisational support from Statistics Norway and the Department of Economics in Oslo, and from the Italian Ministry of University and Scientific Research (MURST research grants 1998 and 2000). Responsible editor: Alessandro Cigno.     

Accounting for family background when designing optimal income taxes: a microeconometric simulation analysis

We develop an extended version of Roemer’s Equality of Opportunity (EOp) criterion that accounts for income differentials between as well as within types, where types are defined by circumstances that are beyond people’s control (parental education, in this study). A microeconometric model of labour supply in Italy is employed to identify income tax-transfer rules that are optimal according to the extended EOp criterion. Overall, the results do not conform to the perhaps common expectation that the more conventional Equality of Outcome criterion is more supportive of “interventionist” (redistributive) policies than the EOp approach.     

Displacement and household adaptation: insured by the spouse or the state?

We investigate the added worker effect in a setting where female labour supply is high and the welfare state is generous. We trace couples’ labour supply and income development following the husband’s job displacement. We find no support for the added worker effect for the full sample of households. However, the added worker effect seems to be at work for subsamples characterised by households where the spouses are not working in the same industry and where the wife did not work full time pre-displacement. When using a measure of total household income, which includes public transfers, we find that the negative income impact of displacement is reduced by approximately 60 to 70 % when we also adjust for lower tax payments. Results suggest that income loss due to displacement is mitigated more by social welfare payments than by labour supply responses of the spouse.     

On high fertility rates in developing countries: birth limits, birth taxes, or education subsidies?

In this paper, we consider two types of population policies observed in practice: birth limits and birth taxes. We find that both achieve very similar equilibrium solutions if tax revenue finances lump-sum transfers. By reducing fertility and promoting growth, both birth policies may achieve higher welfare than conventional education subsidies financed by income taxes. A birth tax for education subsidies can achieve the first-best solution. The welfare gain of the first-best policy may be equivalent to a massive 10–50% rise in income, depending on the degree of human capital externalities and the elasticity of intertemporal substitution.      

Gender and savings in rural India

In this study we use data from rural India to examine the impact of the birth of a boy relative to the birth of a girl (i.e., the “gender shock”) on the savings, consumption and income of rural Indian households. We find that the gender shock reduces savings for medium and large farm households, although there is no evidence that the shock affects savings for the landless and the small farm households. We also estimate the effect of the shock on income and consumption for the former group in order to determine the source of the drop in savings. The results indicate that the fall in savings subsequent to the gender shock arises from its effect on consumption in the year following the birth, and from its effect on income in other years. Received: 3 September 1996 /Accepted: 15 July 1997     

Measuring Child Poverty in South Africa: Sensitivity to the Choice of Equivalence Scale and an Updated Profile

This paper offers evidence on the sensitivity of child poverty in South Africa to changes in the adult equivalence scale (AES) and updates the child poverty profile based on the Income and Expenditure Survey 2005/06. Setting the poverty line at the 40th percentile of households calculated with different AESs the scope and composition of child poverty are found to be relatively insensitive to the scale used. The rankings of children of different ages, girls versus boys, racial groupings and children living in rural versus urban areas are unaffected by choice of AES, although some provincial rankings on the poverty headcount measure are. The proportions of children and households ‘correctly’ identified as poor for the full range of scales is extremely high. These findings support the argument that it may be appropriate for profiling poverty in South Africa to use a poverty line based on a per capita welfare measure. For the construction of the child poverty profile, per capita income is used as the welfare indicator with the poverty line set at the 40th percentile of household. The profile suggests that poverty amongst children is more extensive than amongst the population or adults even after the massive injection of transfers into households with poor children through the child support grant. The child poverty headcount, depth and severity are all highest amongst children age 0–4 and lowest amongst those aged 15–17, who are not yet beneficiaries of the grants. They are also highest amongst African and Coloured children. Large variations across provinces remain. The analysis underlines the importance of prioritising children in the fight against poverty, particularly in their earliest years.     

中国城市居民劳动供给行为特征

经过40多年的改革开放和计划生育政策实施,我国城市居民家庭规模、家庭财富、受教育程度等影响劳动供给行为的因素均发生了巨大变化。这种变化对就业政策的制定和相关福利政策的实施都有较大影响。运用来自29个省市6675个城市家庭、8771个居民的调查数据对我国城市居民劳动供给行为进行了研究。结果表明:我国城市居民劳动供给曲线整体上呈现向右上方倾斜的特征,随着工资上涨,劳动者工作时间随之增长,但是工资弹性仅有0.52,处于缺乏弹性的区间;分类型看,女性、户主、受教育程度较低者工资弹性较大,对工资变动更加敏感;女性、户主、受教育程度较高者收入弹性更大,对收入变动更加敏感;分年龄阶段看,18—30岁的新生代劳动力工作时间受工资和非工资收入影响均不显著,31—45岁的劳动力比45岁以上劳动力工资弹性和收入弹性更高,对工资和非工资收入更加敏感。本文的研究结果对细化实施就业政策和制定相关福利政策具有一定启示作用。     

Child support and non-resident fathers’ contact with their children

The paper presents a model of a non-resident father’s child support and contact with his child, which combines the public good treatment of “child quality” with “trade” in father–child contact time in a setting of non-cooperative interaction. It predicts that father’s income and mother’s non-labour income should have exactly the same effect on the frequency of father–child contact if he chooses to make lump sum payments to the mother. If he does not or there is a binding child support payment order, they have effects opposite in direction. A higher binding support order reduces father–child contact but may well raise “child quality”.

Social Stratification and Consumption Patterns in Turkey

In this article, by analyzing consumption practices of Turkish households, I attempted to identify whether there are distinctions between different social classes in Turkey. Stated another way, I assessed and explored the impact of socio-economic forces on consumption patterns, taste and lifestyle. In doing so, I tested emprically, two theoretical approaches, Bourdieu’s “reproduction theory” and Giddens “class Structuration thesis”. A total of eight dependent variables are analyzed in terms of the linkages between those selected consumption items and social structure. In general, the emprical findings indicated that the intersection and reinforcement of social class variables, such as income, education, occupation, sector, and neighborhood differentiation, determined consumption patterns and lifestyle differences in Turkey.     

Hope and Adaptation to Old Age: Their Relationship with Individual-Demographic Factors

This study examined the relationship between hope as disposition, adaptation to old age, and individual-demographic factors. One hundred and fifty older adults, aged 60–93 years old, completed the Adult Dispositional Hope Scale developed by Snyder et al. [1991, Journal of Personality and Social Psychology, 60, pp. 570–585], and the Adaptation to Old Age Questionnaire developed by Efklides et al. [2003, European Psychologist, 8, pp. 178–191]. Factor analyses revealed 2 factors for hope, “Pathways Thought” and “Agency Thinking”, and 4 factors for adaptation to old age, “Health Comparison”, “General Adaptation/Self-Efficacy”, “Self-Control”, and “Generativity”. Regression analyses showed that hope as pathways thought predicted all factors of adaptation, whereas hope as agency thinking predicted only “General Adaptation/Self-Efficacy” and “Self-Control”. There were also some effects of gender, education, marital status, place of residence, and health status on specific aspects of adaptation to old age.     

Cultural Consumption Patterns in South Africa: An Investigation of the Theory of Cultural Omnivores

Contrary to Bourdieu’s theory (Distinction: A social critique of the judgment of taste. Cambridge, Massachusetts: Harvard University Press (1984)) that cultural consumption of so-called “high” versus popular culture is determined by socio-economic class, Peterson (Poetics 21:243–258, 1992; Poetics 33:257–282, 2005) finds that higher income and education groups are more likely to be “cultural omnivores”—consumers of a wide variety of both high and popular cultural goods. Omnivores were also found to be much less likely to exclude other cultures and to be more open to, and tolerant of, the views of others than those with narrower cultural tastes, called “cultural univores”. This article investigates the omnivore/univore hypothesis in a South African context, using survey data collected from 500 attendees of live theatre performances at the National Arts Festival in 2008. Multiple correspondence analysis (also called perceptual mapping) shows an interesting intermediate state between Boudieu-like high culture univores and Peterson omnivores, which could have interesting implications for the development of social tolerance in multi-cultural South Africa.