further co-authors: Nicolas Moreau, Javier Ruiz-Castillo and Frederic Vermeulen A framework for simplified implementation of the collective model of labor supply decisions is presented in the context of fiscal reforms in the UK. Through its collective form the model accounts for the well known problem of distribution between wallet and purse, a broadly debated issue which has so far been impossible to model due to the limitations of the unitary model of household behavior. A calibrated data set is used to model the effects of introducing two forms of the Working Families’ Tax Credit. We also summarize results of estimations and calibrations obtained using the same methodology on data from five other European countries. The results underline the importance of taking account of the intra-household decision process and suggest that who receives government transfers does matter from the point of view of labor supply and welfare of household members. They also highlight the need for more research into models of household behavior.
Myck, Michal, Olivier Bargain, Miriam Beblo, Denis Beninger, Richard Blundell, Raquel Carrasco, Maria-Concetta Chiuri, François Laisney, Valérie Lechene and Ernesto Longobardi (2006), Who receives the money matters: simulating the Working Families' Tax Credit in the UK and some European tax reforms, Review of the Economics of the Household 4, 129-158.