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Title:Household Labor Supply and Welfare Participation in Sweden PDF Logo
Authors:Flood, Lennart
Hansen, Jörgen
Wahlberg, Roger
Issue Date:2003
Series/Report no.:IZA Discussion paper series 769
Abstract:In this paper, we formulate and estimate a structural, static model of household labor supply and multiple welfare program participation. Given the complicated nature of both the income tax schedule and the benefit rules for different welfare programs, we use unique access to a very detailed micro-simulation model to generate accurate budget sets for each work-welfare combination. Moreover, when determining the budget sets, we use extraordinary high-quality data on earnings and other types of incomes, obtained both from employers and from income tax records. The results suggest that labor supply among two-parent families in Sweden is quite inelastic. A policy simulation designed to increase labor supply incentives for low income families generated substantial positive welfare effects, despite only minor increases in labor supply and decreases in welfare participation.
Subjects:household labor supply
welfare
unobserved heterogeneity
JEL:J2
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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