Document Type
Article
Publication Date
2017
Abstract
This research investigates the effects of income taxation on the motivation to work by employing a survey method for the Azerbaijan population. The two research questions of interest are, if subjects consider income taxes when deciding how many hours to work and how subjects would react to a hypothetical 5% income tax rate increase. Also examined are the responses to these questions between subjects with different socio-economic characteristics. Examining cross-sectional data of 326 respondents reveals that income taxes do not influence Azerbaijan labour market participants’ motivation to work, regardless of their socio-economic characteristics. Empirical results indicate that reactions to hypothetical income tax rate increases show that the strength of response differs significantly across gender, age, marital status, field of employment, and income level. However, there are no significant results for differences in gender and after-tax wages. Our study contributes to the labour supply literature with the theory that after an income tax is imposed, both the average price and the average utility of leisure is greater for high wage earners than low wage earners.
Recommended Citation
Nadirov, O., Dehning, B., Aliyev, K., & Iskandarova, M. (2017). Who reacts to income tax rate changes? The relationship between income taxes and the motivation to work: The case of Azerbaijan. Scientific papers of the University of Pardubice. Series D, Faculty of Economics and Administration. 40/2017.
Copyright
The authors
Included in
Accounting Commons, Behavioral Economics Commons, Economic Theory Commons, International Economics Commons, Taxation Commons, Work, Economy and Organizations Commons
Comments
This paper is part of the Scientific papers of the University of Pardubice. Series D, Faculty of Economics and Administration. 40/2017.