Taxation and Labor Supply

Project managerSteinar Strøm
ClientNorges forskningsråd
Client project no.
ParticipantsJohn Dagsvik
Zhiyang Jia
Marilena Locatelli
Period2010 - 2012 (ended)

Project description

In this project there are four different studies: 1) The impact on the labor supply choice among medical doctors of changes in the tax structure. Almost all medical doctors working in Norwegian hospitals are followed over 10 recent years. A transitions model that allows for correlation in utilities across time is estimated on Norwegian panel data. The estimated model is employed to demonstrate how the choices of medical doctors respond to changes in the tax structure. The choices are whether to work in the private or public sector and hours of work. 2) How taxes affect transition in the Norwegian labor market. Again a transition model is estimated on recent longitudinal data, covering a representative sample of the Norwegian population. The transitions that are covered are between public and private sectors and between different working loads in terms of annual hours 3) Utility constant labor supply elasticities when the utility function is random. When the utility function is random, the standard approach to calculate utility constant labor supply elasticities (Slutsky elasticities) cannot be used. Instead one has to derive choice probabilities related to constant utility levels. We clearly find that Slutsky elasticities in random utility models are numerically much lower than in deterministic models. 4) A new method in accounting for selection when labor supply models are estimated. A full information likelihood procedure is applied to estimate simultaneously labor market participation, hours of work and wage equations.


Scientific Journal

Eide, Erling, Kristine von Simson og Steinar StrømRank-Dependent Utility, Tax Evasion, and Labor Supply2011FinanzArchiv vol 67(3), 261-281[PDF] [DOI]
Locatelli, Marilena og Steinar StrømComputation of the Compensating Variation Within a Random Utility Model Using GAUSS Software2011Modern Economy Vol 2, 383-389[PDF] [DOI]

Other publications

Eide, Erling, Kristine von Simson and Steinar StrømRank Dependent Utility, Tax Evasion and Labor Supply2010CESifo Working paper no. 3213[PDF]