Taxes are related to wages in two ways. First, taxes directly reduce after-tax
wages, which leads to direct economic effects, referred to in the economics
literature as the income effect and the substitution effect. Second, there is a
psychological effect. Taxes can have a psychological effect that can increase or
decrease the motivation to work. In this paper, behavioural theories are developed
and demonstrated and these show that workers at high and low levels of pay
behave differently when tax rates change. One theory posits that to survive,
workers must maintain a subsistence level of income. A change in taxes changes
the minimum number of hours of work required to maintain this subsistence level
of income. The second theory prescribes that the utility for leisure is not constant,
but is an increasing function of income. This is due to the larger opportunity set
of activities available at higher levels of income. The theories can be demonstrated
by considering the changes in hours worked in reaction to changes in labour
income tax rates. In countries with low wage rates, as labour income taxes
increase, the motivation to work increases, because workers have to work more
to maintain a minimum level of income. In countries with high wage rates, as
labour income taxes increase, the motivation to work decreases, because workers
have a high preference for leisure. The theories are tested using a time-series
cross-section of data covering 15 countries for 50 years. The findings imply that
wage levels and preferences for leisure/work can account for the differences in
changes in hours worked in response to changes in tax rates.
| ISBN: | 978-80-7454-748-5 |
|---|
| EAN: | 9788074547485 |
|---|
| Počet stran |
42 stran |
| Datum vydání |
03. 09. 2018 |
| Pořadí vydání |
První |
| Jazyk |
anglický |
| Vazba |
e-kniha - pdf |
| Autor: |
Orkhan Nadirov |
| Nakladatelství |
Univerzita Tomáše Bati ve Zlíně |
| Tématická skupina |
1 - Ekonomika |
| Neprodejná publikace. Publikaci je možné poptávat zde: Vydáno elektronicky - dostupné na https://digilib.k.utb.cz/bitstream/handle/10563/42644/nadirov_2018_teze.pdf?sequence=7&isAllowed=y |
|---|
Svaz českých knihkupců a nakladatelů