Taxes,female labour supply and household income: differences between the Netherlands and the Federal Republic of Germany

The article investigates the effect of taxes and social premiums on female labour supply and household income. A comparison is made between labour supply and household income between the Netherlands and the Federal Republic of Germany in 1992. A discrete choice model for labour supply is used in which taxes and social premiums are implicitly incorporated. As male labour supply is highly inelastic an individual, male chauvinist model is used. The estimated models are used to simulate the effect of the differences in the tax and social premium system on the differences in labour supply and income between both countries. The results indicate that labour force participation is higher the more individualized the system. The German system leads to a lower tax burden compared to the Dutch system. It is concluded that differences in the tax and social premium system between both countries have hardly any influence on the differences in the inequality of net household labour income. There is evidence that the German system leads to a slightly more unequal distribution of household income. It is also concluded that although the tax and social premium system does influence labour supply and income, it can be doubted whether these effects are substantial.     

Collective female labour supply: theory and application

This article deals with female labour supply in the collective framework. It studies married couples and starting from the empirical observation that the husband's labour supply is generally fixed at full-time. It shows that, in this case, structural elements of the decision process, such as individual preferences or the rule that determines the intra-household distribution of welfare, can be identified if household demand for at least one commodity, together with the wife's labour supply, is observed. These theoretical considerations are followed by an application using French data.     

Economic status of households and labour supply to market and non-market activities mdash; some results from a poor rural economy

Assuming a given underlying utility structure for all households, we have demonstrated that the differential labour supply behaviour among household categories results owing to the different sets of constraints they face depending on their economic status and asset ownership. Using the criteria implied by the theoretical model four household gorups are defined. The labour supply functions estimated for these four groups support the theoretical result of significantly different supply behaviour. The empirical exercise, as expected, indicates that the labour supply decision of the subsistence group is guided by their need to achieve the minimum level of consumption while the middle-income households, who do not have enough non-labour income to meet their minimum subsistence need, tend to work longer hours in market activities than the workers from high-income households. However, market labour supply by high-income households is found to be relatively more sensitive to changes in the wage rate. The behaviour of the household groups differ so significantly that if an aggregate model is estimated ignoring inter-household differences, the predicted hours will grossly over-estimate labour supply to market activities.     

Labour-supply impacts of effective welfare programme parameters: a reanalysis

We quantify the impact of effective welfare programme parameters on the labour supply of single female household heads – the primary group of welfare recipients in the USA. Our panel of data is derived from the US Census Bureau's Current Population Survey for the years 1979 to 1990 inclusive. Behavioural impacts from a range of economic variables are consistent in sign with predictions made by economic theory. We find that effective welfare gurantee levels and the effective tax rate on earned income both significantly decrease labour supply. The marginal effects of these welfare programme parameters are economically small: a US$1000 increase in the expected welfare guarantee level reduces annual labour supply by about 36 hours; a 10 percentage point increase in the effective tax rate on earned income reduces annual labour supply by about 7.5 hours.     

A test of a unitary model on labour supply using the information of household decision-making systems

This article tests whether a unitary model is consistent with household behaviour using the data of two-earner couples. It focuses on the unitary model assuming that all family members have the same utility function. The analysis investigates the difference in a husband's and wife's labour supply between the household that determines the wife to be the main decision-maker and the household that selects a different decision-making system under the control of individual and household characteristics. The estimation employs a treatment effects model to consider the selectivity bias caused by unmeasured characteristics. Results show that the household with the wife as the main decision-maker increases the husband's working hours by 15% and decreases the wife's working hours by 59%, compared to the household that selects a different decision-making system. This implies that the unitary model is rejected. Additionally, the husband's wage rate, the husband's and wife's health status, and their gambling addiction determine the household decision-making system such as the variables that determine the reservation utility of not being married. The effect of the decision-making system on the labour supply and that of the determinant factors on the decision-making system are consistent with the implications obtained from Nash bargaining models and collective models.     

Household labour supply in Britain and Denmark: some interpretations using a model of Pareto Optimal behaviour

This paper analyses the labour supply behaviour of households in Denmark and Britain. It employs models in which the preferences of individuals within the household are explicitly represented. The households are then assumed to decide on their labour supply in a Pareto Optimal fashion. Describing the structure of the household decision in this way allows preliminary results to be obtained on the internal weighting of utilities within the household.     

Gender roles,labour market participation and household income position

In empirical research on labour supply behaviour, variables like age, education or the household's financial situation as well as economic and demographic characteristics, social attitudes and gender role schemes are believed to influence the annual working hours. This paper starts from the assumption that these determinants work differently according to the poverty level of the household in which the individual lives. Using data from the German Socio-Economic Panel (GSOEP), the paper empirically tests this hypothesis for women and men living in households with a disposable income above the poverty line and of those living in poor households. The results of multiple regression analysis show traditional gender role patterns in labour supply decisions, but only for persons in households with an income above the poverty line.     

Disability in Italian households: income,poverty and labour market participation

This article studies the economic effects of disabled members on Italian households, with the aim of identifying a suitable target group for welfare policies. Survey of Households Income and Wealth data for the year 2000 is used. Preliminary results show significant differences in levels of income and poverty diffusion to the detriment of households with disabled members. We propose an exogenous explanation: the replacement ratio between disability benefits and expected labour income shows that disability benefits do not compensate the potential incomes of the disabled person and of the possible carer, except in households with severe socioeconomic disadvantages. We also propose an endogenous explanation: applying a logit model we show that the labour market participation of the possible carer is reduced in households with disabled persons. In order to increase the income of the households with disabled members, policy recommendations include the provision of care services and structural policies to improve employment, income and educational opportunities for households at greatest disadvantage.     

TECHNOLOGICAL CHANGE, INEQUALITY AND WORK SHARING

The effects of technological change on wage inequality are usually studied under the assumption of exogenous supplies of skilled and unskilled workers. Moreover, in these studies there is no distinction between the stock (number of workers) and the flow (hours of work) dimension of labour services. In the present paper, we construct a model in which hours of work and technological change affect both the (relative) demand and supply of unskilled workers. The labour supply of unskilled workers (numbers of persons) is derived from a model of household labour supply in which households differ regarding the disutility suffered when both household members work. Combining together the (relative) supply and demand parts of the model we are able to establish technological change (either biased or neutral) as a plausible explanation of recent trends in wage inequality.     

Informal home care and labor-force participation of household members

In Germany, informal home care is preferred to professional care services in the public discussion as well as in legal care regulations. However, only minor importance is ascribed to the opportunity costs caregivers face. Therefore, this article explores the influence home care has on the labor supply of caregivers who cohabitate with the care recipient. I use data from the German Socio-Economic Panel from 2001 to 2007, which allows researchers to merge the characteristics of both groups for the first time. Owing to diverging gender roles, I examine female and male caregivers separately. The results show that having an individual in need of care in the household does not decrease labor supply to an economically relevant quantity. As providing care might be endogenous to the labor-supply decision, I test for endogeneity by using characteristics of care recipients as instruments and I additionally test for sample attrition. Moreover, the panel structure allows me to control for unobserved heterogeneity.     

The role of labour demand elasticities in tax incidence analysis with heterogeneous labour

Whether labour bears full burden of household level income and consumption taxes ultimately depends on the degree of substitutability among different types of labour in production. We find more variation in incidence patterns across households with less than perfectly substitutable heterogeneous labour than with perfectly substitutable homogeneous labour in production. This finding is based on results obtained from homogeneous and heterogeneous labour general equilibrium tax models calibrated to decile level income and consumption distribution data of UK households for the year 1994. We use labour supply elasticities implied by the substitution elasticity in households' utility functions and derive labour demand elasticities from the substitution elasticity in the production function. First version received: March 1998/Final version received: April 1999     

The determinants of access to health care and medicines in India

This article explores the issue of demand for health care and medicines in India where household share of total health expenditure is one of the highest among high- and low-income countries. Previous work found that important determinants include health status, socio-demographics, income and demand for care was inelastic. Compared with previous studies, this article uses large household data sets including data on medicine expenditure to explore health-seeking behaviour. Count models find that determinants include health status, socio-demographic information, health insurance, household expenditure and government regulation. Elasticities range from ?0.13 to 0.03 and are generally consistent with literature findings. For inpatient care, conditional on having at least one hospitalization, the expected number of hospitalizations increases with being male and household expenditure. Medicine expenditure accounts for a large share of household health expenditure. Low-income individuals could experience problems and raises important policy implications on the demand and supply side to improve access to health care and medicines for patients in India.     

Multi-family households in a labour supply model: a calibration method with application to Poland

Models of cooperative and noncooperative behaviour opened the household ‘black box’ and allowed for individual treatment of partners in couples. However, labour supply literature has so far largely ignored a broader issue – the distinction of single versus multi-family (‘complex’) households. We propose a method to account for multi-family household structure by borrowing from recent applications of the collective model to identify the degree of sharing. We assume that each household is characterized by a between-family sharing parameter, which is calibrated on estimated preferences, observed labour market status and other characteristics. We apply the method to Polish labour market data.     

Determinants of household supply of labour in food-for-work programme in Tigray,Ethiopia

We study the factors that determine the household supply of labour in food-for-work (FFW) projects that seek to address food insecurity and help capital formation in development. Based on data from a survey conducted in 2003 in Tigray, Ethiopia, our probit analysis identifies factors that significantly affect the household decision to participate in FFW programmes. We correct for selection bias, and estimate total and excess supply of FFW labour. Our finding of substantial leakages in targeting that allow relatively well-off households to obtain FFW employment yield important implications for the prevailing FFW wage. We also argue that FFW programmes will be more effective if they are designed to account for geographic heterogeneity in such factors as male to female labour participation differences and the incidence of debilitating diseases.     

The Household, Time Use and Tax Policy

This paper is concerned with modelling household decisions andthe welfare effects of tax policy. It seeks to emphasise theimportance of a model that incorporates household productionand can take account of the evident female labour supply heterogeneityacross two-parent families. If, after having children, someproportion of households substitute domestic for market laboursupply, the income and consumption variables used as the taxbase in most countries may be poorly correlated with livingstandards. Taxes and welfare programs based on these variablesmay increase inequality by shifting the overall tax burden tolow and middle wage families with both partners in work, awayfrom families with much higher wages and in which only one memberworks to earn the same joint market income. The paper combinesdata on time use, income, taxes and benefits to show how theytrack female labour supply over the life cycle, resulting inmuch higher tax burdens on two-earner households. (JEL D13,D91, H31, J22)     

Child care voucher and labour market behaviour: experimental evidence from Finland

This article provides experimental estimates of the impact of a voucher for private care on labour force participation and use of private and public child care within the Nordic system of universal provision of public care. In a market that was providing high-quality, low-cost public child care, a voucher is nevertheless found to have a significant, positive effect for the use of private child care with zero effects on either use of public care or labour force participation. The use of private increased by five percentage points in the whole country and by five to seven percentage points in areas that suffer from excess demand for child care as a result of the introduction of the private child care voucher.     

Population density,urbanisation and agricultural mechanisation in modern Ghana

Farmers' technological choices take place within farming systems that are shaped by population pressure, connectivity to urban markets and agro-ecological conditions. The relationship between these drivers and agricultural technology use is ambiguous. On the one hand, population growth can increase the supply of labour, driving down wage rates and reducing the incentives for mechanisation. On the other hand, rural–urban movements of people can reduce rural labour supply while simultaneously driving up the demand for food and hence the demand for mechanisation. Past theories of agricultural mechanisation have explained the low adoption of agricultural machinery in land-abundant cereal production systems of SSA in terms of these drivers. However, recent empirical observations find extensive adoption of mechanised ploughing technology by small, medium and large-scale farmers in Ghana. Examining the Ghanaian experience can thus shed new light on theories of mechanisation. A large household survey dataset covering eight districts is combined with geo-spatial data on population, urban proximity and agro-ecological factors to consider whether the existing theories are able to explain farm-level adoption decisions in this context. The analysis finds that a farmer's decision to use agricultural machinery is associated with lower population density and proximity to urban centres. In northern Ghana, these drivers of technological change are as important as farm household characteristics in understanding cross-sectional patterns of machinery adoption.     

The Cost of Public Funds in Australia*

A model of labour supply is used to calculate Australia's marginal cost of public funds, which is the appropriate cut-off benefit/ cost ratio for an additional public project. The labour supply model incorporates effective average and marginal tax rates faced by the representative household in each gross income decile. These rates are estimated from the ABS 1988–89 Household Expenditure Survey. A simulation analysis is performed to calculate the effect on labour supply of a 1 per cent increase in marginal tax rates. The estimated changes in tax revenues and deadweight loss in each decile are used to estimate the marginal cost of public funds.     

Social Justice in Comparative Political Economy: Lessons from Habermas and the Contemporary German Case

This article critiques recent operationalisations of social justice theories in empirical research in comparative political economy from an epistemological entry point. It offers an alternative epistemic framework based on Habermas’s system and lifeworld distinction to reconcile normative theory with empirical research before developing a critical theory of social justice based on two principles: Nancy Fraser’s parity of participation and Hauke Brunkhorst’s notion that functional differentiation in systems cannot generate asymmetric moral standards. These principles are then operationalised for regimes of welfare capitalism before exploring the contemporary German labour market in these terms, drawing on original qualitative research. It demonstrates that parity of participation cannot be achieved when the moral duty to participate is asymmetrically applied. It concludes capitalism is inherently unjust in any variety due to the inequality of wealth and free movement of capital reinforcing the inequality of moral expectations characterising the lived experience of welfare-mediated labour markets. Therefore, accepting this inherent injustice and whether institutions of the welfare state exacerbate or mitigate it should be the central focus of future research on social justice in comparative political economy.     

Off- and on-farm labour participation in Italian farm households

Most farms are family business, both in developed and developing countries. Labour allocation choices of farm household members are therefore relevant both for production choices in the farm and for rural labour markets. In particular, off-farm work and combination of on- and off-farm work (pluriactivity) are viewed as an efficient allocation of household labour resources. Moreover, labour choice of the children of the farm household is relevant for farm succession. In this article, we extend previous literature by estimating in an unified framework labour participation choices both for on- and off-farm work for operators, spouses and their eldest children in working age, using a five equation multivariate probit.