Title:	The Effect of Taxation on Joint Household Labor Supply
DNr:	NAISS 2024/22-625
Project Type:	NAISS Small Compute
Principal Investigator:	Maksym Khomenko <maksym.khomenko@su.se>
Affiliation:	Stockholms universitet
Duration:	2024-04-30 – 2025-05-01
Classification:	50201
Keywords:

Abstract

Taxation has an effect of what choices individuals make. Such decisions may be even more complex when they are made jointly in households and involve decision if and how much to work, what occupation to choose, whether and when to have children, and whether to pursue education. Such individual decisions are not only crucial on the individual level but also for the government and the society as they affect the government through collected revenues and the economy through the aggregate labor supply. Such individual decisions are inherently dynamic (i.e., forward-looking) and their effect persists over generations. This paper proposes and estimates a comprehensive dynamic model that describes individual and joint dynamic decision relating to labor supply, fertility, and education. The model is estimated using detailed data and relying on tax reforms over a long period of time to identify key parameters that determine individual and household choices. The insights from counterfactual simulations based on estimated parameters would allow assessing an optimal design of income taxation from different angles it may affect individuals and the society.