Tax reform, sector-specific labor supply and welfare effects
Journal article, Peer reviewed
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Original versionDagsvik J.K., M. Locatelli og S. Strøm (2009): Tax Reform, Sector-specific Labor Supply and Welfare Effects, The Scandinavian Journal of Economics, 111 (2), 299-321 http://dx.doi.org/10.1111/j.1467-9442.2009.01565.x
This paper focuses in particular on the 1992 tax reform in Norway. In this reform the top marginal tax rates were cut considerably. We find that the impact on overall labor supply is rather modest, but these modest changes shadow for stronger sectoral changes. The tax reform stimulated the women to shift their labor from the public to the private sector and to work longer hours. A calculation of mean compensated variation, calculated within the framework of a random utility model, shows that the richest households benefited far more from the 1992 tax reform than did the poorest households.
Authors version of the following article: Scandinavian Journal of Economics, vol. 111 (2),299-321, which has been published in final form at: DOI: 10.1111/j.1467-9442.2009.01565.x