A unitary model is then estimated on these collective data and unitary and collective responses to a tax reform are compared. We focus on the introduction of linear taxation in Germany. The exercise is replicated for other European countries and other topical reforms. Distortions due to the use of a unitary model turn out to be important in predicting labour supply adjustments, in the design of tax revenue neutral reforms, and in predicting a reform's welfare implications.

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 intrahousehold 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.

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SERIES e MATEF sono pubblicati a cura del Dipartimento di Scienze economiche dell'Università degli Studi di Bari. I lavori riflettono esclusivamente le opinioni degli autori e non impegnano la responsabilità del Dipartimento. SERIES e MATEF vogliono promuovere la circolazione di studi ancora preliminari e incompleti, per suscitare commenti critici e suggerimenti. Si richiede di tener conto della natura provvisoria dei lavori per eventuali citazioni o per ogni altro uso. SERIES and MATEF are published under the auspices of the Department of Economics of the University of Bari. Any opinions expressed here are those of the authors and not those of the Department. Often SERIES and MATEF divulge preliminary or incomplete work, circulated to favor discussion and comment. Citation and use of these paper should consider their provisional character.

We discuss the strengths and weaknesses of the fiscal consolidation package adopted by Italy in 2011. Estimated at 3.3% of GDP, the tax measures were introduced to reduce public deficits without weakening the prospects of economic recovery or producing adverse redistributive outcomes. The tax reform mainly increases consumption and property taxes and gives relief for firms that recapitalize or hire young workers and women. To some extent, these measures are consistent with scholarly suggestions to foster short-and long-term economic growth by shifting the tax burden from capital and labour income towards consumption and property. Using microsimulation models, we evaluate the distributional and growth effects of the tax package. The indirect and property tax reforms are highly regressive, while the reform as a whole makes limited resources available for growth-enhancing policies, in terms of a reduction in the effective corporate tax burden. We propose a revenue neutral alternative reform that allows channelling more fiscal resources towards corporate tax relief, while at the same time producing less regressive distributional effects.JEL Codes: H2, D22, D31