A Structural Approach to Estimating the Effect of Taxation on the Labor Market Dynamics of Older Workers

Haan, Peter; Prowse, Victoria L.

doi:10.2139/ssrn.1373336

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A Structural Approach to Estimating the Effect of Taxation on the Labor Market Dynamics of Older Workers

IZA Discussion Paper No. 4102

27 Pages Posted: 7 Apr 2009

See all articles by Peter Haan

Peter Haan

DIW Berlin, German Institute for Economic Research; IZA Institute of Labor Economics; Free University of Berlin (FUB); Berlin School of Economics

Victoria L. Prowse

Purdue University - Department of Economics; IZA Institute of Labor Economics; German Institute for Economic Research (DIW Berlin)

There are 2 versions of this paper

Abstract

We estimate a dynamic structural life-cycle model of employment, non-employment and retirement that includes endogenous accumulation of human capital and intertemporal non-separabilities in preferences. Additionally, the model accounts for the effect of the tax and transfer system on work incentives. The structural parameter estimates are used to evaluate the effects of a tax reform targeted at low income individuals on employment behavior and retirement decisions.

Keywords: life-cycle labor supply, income taxation

JEL Classification: C23, C25, J22, J64

Suggested Citation: Suggested Citation

Haan, Peter and Prowse, Victoria L., A Structural Approach to Estimating the Effect of Taxation on the Labor Market Dynamics of Older Workers. IZA Discussion Paper No. 4102, Available at SSRN: https://ssrn.com/abstract=1373336 or http://dx.doi.org/10.2139/ssrn.1373336