Market and Non-market Labor Supply and Recent German Tax Reform Impacts - Behavioral Response in a Combined Dynamic and Static Microsimulation Model

摘要

This study on market and non-market labor supply and taxes is based on a theoreticalmicroeconomic model with multiple labor supply in the formal and informal economy.This multiple time allocation model, which explicitly takes into account taxes, transferpayments, socioeconomic characteristics of the individual and the household, isspecified in a multiple three-stage approach explaining the participation probability, therelevant wages and the hours of work in different activities. Uncompensated andcompensated elasticities on market and non-market labor supply are computed. Theestimates are based on data from the enlarged Sfb 3-Secondary Occupation Survey1984, enlarged by tax and regional information for the economic situation and labordemand consideration. This microanalysis will follow the substantial question whetherincentive or disincentive labor supply effects of the 1990 German tax reform are to beexpected. The recent German Tax reform impacts are quantified by a combineddynamic and static microsimulation approach based on microeconometric estimatedbehavioral pattern representative for the Federal Republic of Germany.