We analyze Pareto-efficient tax deduction rules for work-related expenses. Pareto efficiency dictates a strict rule marginal deductions along the income distribution. An immediate implication is recipe designing Pareto-improving reforms. apply our theory and simulate reform that introduces non-care household services (housekeeping, gardening, laundry) in United States. The combines rates betwee...

Designing Optimal Taxes with a Microeconometric Model of Household Labour Supply The purpose of this paper is to present an exercise where we identify optimal income tax rules under the constraint of fixed tax revenue. To this end, we estimate a microeconomic model with 78 parameters that capture heterogeneity in consumption-leisure preferences for singles and couples as well as in job opportun...

The construction industry in the United States has experienced a remarkable downturn in the past five years. In the mid 1980s, new housing starts averaged nearly 1.8 million per year, slightly below the record pace of 2 million per year in the late 1970s. By 1991, however, the number of new housing starts was just above 1 million. The share of GNP devoted to residential investment fell to 3.3 p...


 Income tax is a major component of state revenues, earmarked to finance the services provided by government. taxes have significant impact, among other things, on economic growth and income distribution. According theory, personal tax—perceived as progressive tax—is main policy tool governments developed countries aimed at reducing inequality in The Israeli in- come has been through refo...

Public sector reforms for several decades have been premised on the assumption that improving the ability of government to manage its business will lead to improved social and economic progress. The 1997 World Bank Report describes a first generation of reforms in which steps were taken to cut government expenditures and to revive the private sector. Measures included budget cuts, tax reforms, ...

This paper reviews the basic theoretical models that are appropriate for analyzing different types of welfare reforms, and the related empirical literature. We first present the canonical labor supply model of a classical welfare program, and then extend this basic framework to include in-kind transfers, incomplete take-up, human capital, preference persistence, and borrowing and saving. The em...