This paper compares collective and unitary models on the basis of simulated collective data with income taxation. We distinguish the cases of individual and joint taxation. Estimating a flexible unitary model, we obtain strikingly different preference parameters depending on the type of taxation. We also obtain substantial differences between predicted adjustments to labor supply following a switch between tax regimes. Our results show that even the design of revenue-neutral reforms may be heavily distorted by the use of a unitary model on collective data. Finally, we discuss distortions affecting the welfare analysis of reforms on the basis of unitary estimates when the model generating the data is a collective model. The results suggest that increased efforts should be devoted to the estimation of collective models with taxation.


Pareto optimal allocations, policy evaluation, simulated data