Embargo Friday 12 September, 2003 at 00:01 am.
Authors: Tim Callan, Richard Layte, Arthur Van Soest, John Walsh
In recent years tax cuts have been used in most Budgets as a way of improving the incentive to work and encouraging more people into employment. Views differ on how great a response can be expected to such tax cuts, but there has been little in the way of hard evidence for the Irish labour market. A new study, led by Professor Tim Callan of the ESRI, provides detailed findings on the size and nature of the Irish labour supply response to tax cuts. The ESRI study shows that the overall labour supply response to general tax cuts may be rather limited. It was estimated that
A reform of the tax treatment of married couples, along the lines of the “individualisation of tax bands” introduced in Budget 2000, was found to have a much greater impact at lower Exchequer cost. If the revenue raised from individualisation were used to cut tax rates, then
Underlying these findings is the fact that, in Ireland as in most countries, married women’s labour supply responds more strongly to financial incentives than that of married men. Most of the change in individuals’ desired hours of work came from changes in labour market participation – men tended to have a high and stable rate of participation, whereas the rate for married women was lower and more sensitive to the net gain from employment.
Members of the Press are invited to attend a Briefing at the ESRI offices, 4 Burlington Road on Thursday, Septemebr 11, at 11.00am.
For further information contact:
Professor Tim Callan on 01 6671525 or 086 813 1281
The ESRI works towards a national vision of ‘Informed policy for a better Ireland’. This means producing high-quality analysis to provide robust evidence for policymaking, with the goals of research excellence and policy impact.
The ESRI produces research that contributes to understanding economic and social change in the new international context and that informs public policymaking and civil society in Ireland.