Question

In America, Suppose you want to test the hypothesis that higher income taxes make people work fewer hours per year on average. The tax rate is your independent variable and hours worked per year is your dependent variable and you want to use each individual country as an observation. Suppose you run your regression and find that people in countries with higher income taxes work more hours per year. What is a potential reason why that could happen? what is the problem in testing the original hypothesis in this way?

Answer 1

ANSWER :-

a).According to McDaniel 2007 and rogerson 2008 in the mid Seventies the basic duty rate on tax rate in Belgium France Germany Italy .

●The Netherlands was around 39 which were higher than the 18 normal charges in the US.

b). particles the mid 2000s the normal expense rate on work in these European nations was around 51

●Which was by and by a horrendous parcel higher than the 22 normal charge in the US.

c). There is a most recent writing that thinks about work market modifications on the concentrated versus the broad edge in novel institutional settings.

●The term of the uncommon downturn egg US versus Germany set forth by means of imprint and wesselbaum 2011 and burda and chase 2011.

d).Apria and Moure 2012 evaluated related writing that examines the impact of institutional minor departure from work market impacts in OECD nations.

☆ Potential purposes:-

●Expected reason as the individuals hourbargaining share is enormous hours per specialist are lessened by extra and business is brought down by utilizing substantially less in the system when hours per representative are chosen totally by methods

●The family this goes to the situation when the laborer has a 100 rate hour bartering energy in this situation when the recreation utility is direct in hours the impact on work is zero and all terrible results are on hours per specialist.

☆ Troubles:-

a). Duties which are immediately forced to meet any crisis eg argil charge forced for a year or something like that or charges forced on godsend get eg lottery profit don't create damaging consequences for the craving to work shop and contribute.

b).Through redirecting assets to the ideal headings tax assessment can impact the degree.

●The estimation of creation as appropriately as the example of assembling in the monetary framework.

c).The outcomes of tax assessment on the ability to work retailer and make ventures are halfway

●The final product of money weight of expense and mostly the final product of mental weight of duty.

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