JRC Working Paper on Taxation and Structural Reforms-03/2023
Hungary
Abstract
This paper evaluates two hypothetical budget neutral reforms that shift resources from family tax expenditures to family cash transfers. We evaluate these reforms based on a structural labor supply model, EUROLAB, which in turn is based on the microsimulation model EUROMOD and EU-SILC data. We find that both reforms have an inequality decreasing impact. However, when looking at labour supply responses for different household types, we show that the reforms have a substantial impact, especially for females in couple households. Additionally, we show that especially females in the middle of the income distribution will reduce labour supply as a response to the reforms.
