The impact of fiscal policies on agricultural household decisions |
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Authors: | Thomas Glauben Thomas Herzfeld Jens-Peter Loy Swetlana Renner Heinrich Hockmann |
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Institution: | 1. Leibniz-Institute of Agricultural Development in Central and Eastern Europe, D-06120 Halle/Saale, Germany;2. Wageningen University and Research Centrum, Department of Social Sciences, NL-6706KN Wageningen, The Netherlands;3. Department of Agricultural Economics, University of Kiel, D-24098 Kiel, Germany |
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Abstract: | This paper provides a comparative static analysis of farm household's production, consumption, and labor market decisions under alternative tax policies. We explore the implications of non-separable household decisions caused by widespread non-participation in labor, land, financial and/or food markets, as is typical of low income economies. The analytical results indicate that when labor market imperfections occur, most tax-induced responses are ambiguous, mainly due to shadow price effects. This is particularly the case for the labor market and production responses to most tax tools under study, while a decreasing demand for consumption goods appears to be the result in several cases. Furthermore, tax-induced allocation effects may differ between the non-separable and the separable model versions, indicating the potential impact of labor market constraints on farm household responses to tax policies. In particular, standard taxes as well as a land tax may imply production adjustments in the case of non-separability. |
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Keywords: | H20 H31 Q12 |
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