van Soest, Arthur; Das, Marcel; Gong, Xiaodong
We show how non-parametric flexibility can be attained in a structural labour supply model that can be used to analyse all sorts of (non-linear) tax and benefits reforms. The direct utility function is approximated with a series expansion. For given length of the expansion, the model is estimated by smooth simulated maximum likelihood, using Dutch data on labour supply of married females. Estimates of own and cross wage elasticities and tax reform effects suggest that a series expansion of...[Show more]
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