Labour Supply Responses to Income Tax Changes in Spain

• ANTONIO CUTANDA ^[1] ; JUAN A. SANCHIS-LLOPIS ^[1]
  1. [1] Universitat de València

     Universitat de València

     Valencia, España

     
• Localización: Hacienda Pública Española / Review of Public Economics, ISSN 0210-1173, Nº 245, 2023 (Ejemplar dedicado a: Special issue of the “Meeting on public economics 2022”), págs. 71-94
• Idioma: inglés
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• Resumen

  • This paper simulates the response of the Spanish labour supply to income tax changes using estimates for the intertemporal elasticity of substitution of leisure, calculated using a pseudo-panel built combining information from the EPA and the ECPF, for the period 1987-1997. According to our findings, income tax reforms have an impact on Spanish labour market, although the effects are quite small, making this mechanism a restricted tool for addressing the country’s existing social security system deficit. Further, labour responses differ for men and women, across workers’ age, as well as between permanent and fixed-term contract workers.