Work disincentive effects of taxes among Danish married men and women

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    Final published version, 252 KB, PDF document

  • Ebbe Krogh Graversen, Denmark
  • Centre for Labour Market and Social Research
In this paper the labour supply for Danish married men and women are estimated, using the piecewise linear Hausman model approach to account for non-linearities in taxes. The model takes the joint decision of participation and hours into account as well as measurement errors and unobserved heterogeneity of preferences. A linear and a non-linear labour supply function are estimated. Since the present paper is the first Danish contribution using the piecewise linear estimation technique, the results are compared with and found very similar to earlier Swedish results. We find no evidence of a backward bending labour supply curve. The inclusion of nonparticipants in the estimations increases the labour supply elasticities considerably. Finally, we simulate the labour supply responses of a few recently proposed tax reforms, among these an earned-income-tax-credit (EITC).
Original languageEnglish
Publication statusPublished - 1997

    Research areas

  • Arbejdsstyrke, Beskæftigelsesgrad, Skattepolitik, Danmark, HHÅ forskning, Labour supply, Piecewise linear budget constraints, Incentive effects

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