Optimal Tax-Transfer Rules Under Equilibrium and New Labour Demand Scenarios

24 Pages Posted: 4 Aug 2020

See all articles by Ugo Colombino

Ugo Colombino

University of Turin - Department of Economics

Nizamul Islam

Luxembourg Institute of Socio-Economic Research (LISER)

Abstract

We present an extension of the numerical approach to empirical optimal taxation allowed by a peculiar structure of a microeconometric model of labour supply that includes a representation of the demand side. This makes it possible to identify optimal tax-transfer rules while accounting for equilibrium constraints and to evaluate the effects of exogenous labour demand shocks. We provide illustrative examples using the 2015 EU-SILC data set for Italy.

Keywords: empirical optimal taxation, microsimulation, microeconometrics, evaluation of tax-transfer rules, equilibrium, labour demand shocks

JEL Classification: H21, C18

Suggested Citation

Colombino, Ugo and Islam, Nizamul, Optimal Tax-Transfer Rules Under Equilibrium and New Labour Demand Scenarios. IZA Discussion Paper No. 13541, Available at SSRN: https://ssrn.com/abstract=3665101

Ugo Colombino (Contact Author)

University of Turin - Department of Economics ( email )

Via Po, 53
Torino, 10124
Italy

Nizamul Islam

Luxembourg Institute of Socio-Economic Research (LISER) ( email )

11, Porte des Sciences
Campus Belval – Maison des Sciences Humaines
Esch-sur-Alzette, L-4366
Luxembourg

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