Tax reform evaluation using non-parametric methods: Sweden 1980–1991

Nonparametric structural estimation of labor supply in the presence of censoring

“…Blomquist and Newey (2002) and Blomquist et al (2001) use the same nonparametric approach as here, but they use it on married men. There are also a number of studies (Selén, 2005;Ljunge and Ragan, 2006;Hansson, 2007;Gelber, 2008;and Blomquist and Selin, 2009) that look at taxable income and the extensive reforms from 1980 to 1991 using register data and natural experiment or instrumental variables approaches.…”

“…Actual reform simulations often depart from pre-reform samples further back in time (e.g., Blomquist et al 2001 andFlood et al 2007). …”

“…The coefficient is then reported for equivalent net post-VAT incomes in Equivalent. Equivalent net incomes are calculated by dividing household net incomes, including transfers, by the number of consumption units in each family, treating each adult as 0.96 and each child as 0.66 units as in Blomquist et al (2001). Each household is then weighted by its size (the number of family members).…”

“…Estimation is carried out with OLS. Blomquist et al (2001), Wu (2005), and Kumar (2006Kumar ( , 2007 are the only others who have applied this approach.…”

“…Additionally accounting for the behavioral effects of the husbands, using back-of-the-envelope calculations based on the labor supply estimates and simulation results for married Swedish men (Blomquist et al, 2001), gives marginal tax rates that are on the right side in the low and medium income brackets but at the revenue maximum in the high income brackets. A comparison of the spouses shows that the financial effects on the wives to which their behavioral effects translate are much larger than those on their husbands, despite the wives' lower gross wages.…”