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Filling in the Blanks: How Does Information about the Swedish EITC Affect Labour Supply?
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Government.ORCID iD: 0000-0003-0847-5601
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics, Uppsala Center for Fiscal Studies. Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Government. Uppsala Center for Labor Studies (UCLS).ORCID iD: 0000-0002-8466-3041
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Government.ORCID iD: 0000-0002-4327-447X
2022 (English)Report (Other academic)
Abstract [en]

Information plays a key role in economics. According to the benchmark neoclassical model, agents require information in order to optimize their choices. Information, however, is sometimes incomplete or asymmetric in the real world. In this paper, we investigate the role of information for the labour--leisure choice. We conduct an information experiment wherein we distribute a leaflet about the Swedish Earned Income Tax Credit (EITC), and then study the effects with registry data. More specifically, we focus on the household decision to allocate between labour income and parental leave payments. The EITC, it bears noting, applies to the former but not to the latter. The construction of the Swedish EITC generates a strong economic incentive to have some labour income during a calendar year, because it is tailored to benefit low labour income earners more in relative terms. Yet, despite the substantial economic incentives involved, and despite the flexibility with which a person may earn labour income, we find that providing information about the features of the EITC has zero impact on labour supply. 

Place, publisher, year, edition, pages
2022.
Keywords [en]
Information, Labor Supply, EITC
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:uu:diva-474310OAI: oai:DiVA.org:uu-474310DiVA, id: diva2:1657750
Funder
Institute for Evaluation of Labour Market and Education Policy (IFAU), 188/2016
Note

IFAU Working paper 2022:9

Available from: 2022-05-12 Created: 2022-05-12 Last updated: 2023-10-31

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No full text in DiVA

Other links

https://www.ifau.se/Forskning/Publikationer/Working-papers/2022/filling-in-the-blanks.-how-does-information-about-the-Swedish-eitc-affect-labour-supply/

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Nyman, PärAggeborn, Linuz

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