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Labour Supply Prediction When Tax Avoidance Matters

Author

Listed:
  • Agell, Jonas

    (Department of economics, Uppsala University)

  • Persson, Mats

    (Institute for International Economic Studies, Stockholm University)

  • Sacklén, Hans

    (FIEF)

Abstract
We examine how tax avoidance in the form of trade in well-functioning asset markets affects the empirical study of labor supply. We discuss the implications for tax policy analysis, and we show that a failure to account for avoidance re-sponses may lead to huge errors when predicting how tax reform affects labor supply, tax revenue, and the welfare cost of taxation. In conclusion we argue that our model may explain a number of otherwise hard to understand dimen-sions of tax payer response.

Suggested Citation

  • Agell, Jonas & Persson, Mats & Sacklén, Hans, 1999. "Labour Supply Prediction When Tax Avoidance Matters," Seminar Papers 679, Stockholm University, Institute for International Economic Studies.
    • Handle: RePEc:hhs:iiessp:0679
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    References listed on IDEAS

    as
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    Cited by:

    1. Arai, Mahmood & Thoursie, Peter Skogman, 2005. "Incentives and selection in cyclical absenteeism," Labour Economics, Elsevier, vol. 12(2), pages 269-280, April.
    2. Lars E. O. Svensson, 2000. "The First Year of the Eurosystem: Inflation Targeting or Not?," American Economic Review, American Economic Association, vol. 90(2), pages 95-99, May.
    3. Assar Lindbeck, 2002. "Pensions and Contemporary Socioeconomic Change," NBER Chapters, in: Social Security Pension Reform in Europe, pages 19-48, National Bureau of Economic Research, Inc.
    4. Persson, Mats, 2000. "Five Fallacies in the Social Security Debate," Seminar Papers 686, Stockholm University, Institute for International Economic Studies.
    5. Strauss, Tove, 2000. "Economic Reforms and the Poor," Working Paper Series 164, Trade Union Institute for Economic Research.
    6. Strauss, Tove, 2000. "Structural Reforms, Uncertainty, and Private Investment," Working Paper Series 165, Trade Union Institute for Economic Research.

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    More about this item

    Keywords

    labour supply; tax avoidance; asset markets; tax reform simulation;
    All these keywords.

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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