Scandinavian Working Papers in Economics
Working Paper Series,
Uppsala University, Department of Economics
No 1997:29: Tax Reform Evaluation Using Nonparametric Methods: Sweden 1980 - 1991
Sören Blomquist (), Matias Eklöf () and Whitney Newey ()
Additional contact information
Sören Blomquist: Department of Economics, Postal: Department of Economics, Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Matias Eklöf: Department of Economics, Postal: Department of Economics, Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Whitney Newey: Department of Economics, Postal: Massachusetts Institute of Technology, Cambridge, MA 02139-4307, USA
Abstract: This paper evaluates the tax reforms carried out in Sweden between 1980 and 1991. We use a recently developed nonparametric labor supply function to account for the behavorial responses of the taxed individuals. We decompose the tax reform to study how the separate components influence hours of work, tax revenues and income distribution. The results indicate that the reform was underfinanced and that the increased indirect taxation and redesigned transfer system almost eliminated the positive effects on hours of work due to the decreased marginal taxes on labor income. Further, we compare the results to the predictions of a parametric estimated labor supply model. The responses of the parametric model is almost twice the size of the nonparametric.
Keywords: Nonparametric estimation; labor supply; tax revenues; income distribution
33 pages, December 4, 1997
Full text files
1997wp29.pdf
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