Optimal Tax-Transfer Rules Under Equilibrium and New Labour Demand Scenarios
24 Pages Posted: 4 Aug 2020
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
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