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Labour Supply Incentives in Alternative Tax and Transfer Schemes: A Diagrammatic Introduction - WP 03/08

Publication Details

  • Labour Supply Incentives in Alternative Tax and Transfer Schemes: A Diagrammatic Introduction
  • Published: Jun 2003
  • Status: Current
  • Author: Creedy, John
  • JEL Classification: H31
  • Hard copy: Available in HTML and PDF formats only.
 

Labour Supply Incentives in Alternative Tax and Transfer Schemes: A Diagrammatic Introduction

New Zealand Treasury Working Paper 03/08

Published June 2003

Author: John Creedy

Abstract

The aim of this paper is to illustrate some of the complexities involved in modelling the incentive effects of taxes and transfers, using only basic diagrammatic methods. It describes a range of diagrams which are helpful in thinking about the design of tax and transfer systems and their potential effects on labour supply behaviour. Emphasis is given to the role of highly nonlinear budget constraints and the resulting wide range of labour supply responses.

Contents

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Abstract

Table of Contents

List of Figures

1 Introduction

2 Net and gross incomes

3 Taxes and labour supply

4 Piecewise-linear budget constraints

5 Benefit take-up

6 Conclusion

References

twp03-08.pdf (226 KB) pp. 1–22

List of Figures

Acknowledgements

I am grateful to Nilss Olekalns, Guyonne Kalb, Veronica Jacobsen and Nathan McClellan for helpful comments on earlier drafts.

Disclaimer

The views expressed in this Working Paper are those of the author(s) and do not necessarily reflect the views of the New Zealand Treasury. The paper is presented not as policy, but with a view to inform and stimulate wider debate.

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