Citation

Discussion Paper Details

Please find the details for DP275 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: The Poverty Trap and the Laffer Curve: What Can the GHS Tell Us?

Author(s): Paul Ashton and Patrick Minford

Publication Date: December 1988

Keyword(s): Labour Supply, Poverty, Tax Rates and Unemployment

Programme Area(s): Applied Macroeconomics

Abstract: Budget constraints are drawn up for annual hours and net pay, typically composed of two linear segments: 'benefit-constrained', where extra work forfeits benefit and 'normal', where extra work is subject to the standard marginal tax rate. There are additional linear segments for those on upper tax rates. By ordering males according to the ratio of their maximum net earning power to that when totally unemployed, we establish the appropriate cut-off point for the poverty trap and upper rate segments, from which we estimate labor supply responses to slope and intercept variables. The results suggest high substitution elasticities for those who experienced unemployment during the previous year and those on higher incomes; for average employed men the elasticity was quite l.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=275

Bibliographic Reference

Ashton, P and Minford, P. 1988. 'The Poverty Trap and the Laffer Curve: What Can the GHS Tell Us?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=275