Labor Supply, Taxation and the Use of the Tax Revenues. A Real-Effort Experiment in Canada, France, and Germany

53 Pages Posted: 5 Aug 2019

See all articles by Claudia Keser

Claudia Keser

University of Goettingen (Gottingen)

David Masclet

Université de Rennes I; M@rsouin

Claude Montmarquette

Center for Interuniversity Research and Analysis on Organization (CIRANO)

Date Written: July 31, 2019

Abstract

Is the labor supply of individuals influenced by their perception of how their income taxes will reflow to them or be wasted in administrative expenditures? We examine this issue experimentally by comparing three different treatments of a real-effort game that vary in the degree of redistribution. At one extreme, the Leviathan scenario, where no tax revenue is redistributed to the taxpayers, is compared to the situation where public expenditures are direct transfer payments. In-between, we investigate a situation where tax revenue is used to finance a public good that provides neither direct nor immediate monetary benefits to the taxpayers. We ran this experiment in three different countries, Canada, France, and Germany, to test whether there may exist any country differences in attitude toward taxation and redistribution. We find that effort is significantly higher in the redistribution treatment than the Leviathan treatment. Tax revenue is the highest in the redistribution treatment, followed by the global public good and the Leviathan treatment. On average, the effort is higher in France than in Canada and Germany.

Keywords: Real-effort experiment, Taxation, Redistribution, Labor supply, Laffer curve

JEL Classification: D31, H23, H53

Suggested Citation

Keser, Claudia and Masclet, David and Montmarquette, Claude, Labor Supply, Taxation and the Use of the Tax Revenues. A Real-Effort Experiment in Canada, France, and Germany (July 31, 2019). Available at SSRN: https://ssrn.com/abstract=3430304 or http://dx.doi.org/10.2139/ssrn.3430304

Claudia Keser (Contact Author)

University of Goettingen (Gottingen) ( email )

Platz der Göttinger Sieben 3
Göttingen, 37073
Germany

David Masclet

Université de Rennes I ( email )

11 Rue Jean Macé
35065 Rennes Cedex, Rennes
France

M@rsouin ( email )

France

Claude Montmarquette

Center for Interuniversity Research and Analysis on Organization (CIRANO) ( email )

2020 rue University, 25th Floor
Montreal, Quebec H3C 3J7
Canada
(514) 985-4015 (Phone)
(514) 985-4039 (Fax)

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