IZA DP No. 4102: A Structural Approach to Estimating the Effect of Taxation on the Labor Market Dynamics of Older Workers
published in: Econometrics Journal, 2010, 13 (3), S99 - S125
We estimate a dynamic structural life-cycle model of employment, non-employment and retirement that includes endogenous accumulation of human capital and intertemporal non-separabilities in preferences. Additionally, the model accounts for the effect of the tax and transfer system on work incentives. The structural parameter estimates are used to evaluate the effects of a tax reform targeted at low income individuals on employment behavior and retirement decisions.