Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/124893
Authors: 
Picchio, Matteo
Valletta, Giacomo
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 9378
Abstract: 
This paper evaluates the welfare effects of the 1986 Tax Reform Act (TRA86). In thirty years since its introduction, several studies have analysed the effects of TRA86. However, preference heterogeneity and non-market dimensions of welfare have not been taken into account. We propose an evaluation of the impact of TRA86 on well-being using different welfare metrics which fully retain preference heterogeneity. We estimate utility functions with preference heterogeneity on the basis of structural models of family labor supply. Then, by way of these estimated preferences, we compute several welfare rankings corresponding to different ethical priors. Finally, we identify the losers and the winners of TRA86 under different ethical priors.
Subjects: 
welfare measures
tax reform
preference heterogeneity
discrete model
labor supply
JEL: 
C25
D63
H22
H31
J22
Document Type: 
Working Paper

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