The Impact Of Personal Income Tax Reform On The Labor Supply Of Middle-aged And Old People

China has entered an aging society since 2000.Under the background of the gradual decline of the demographic dividend,the reduction of labor supply and the rising labor costs caused by aging have made China's increasingly scarce labor market worse,which further restricts the development speed of China's economy.In response to the momentum of accelerated development of aging,China has formulated corresponding policies,such as delaying retirement age.Compared with the compulsory measures such as delaying retirement,the personal income tax reform can directly change the marginal salary of the incumbent,change the actual income reduction after retirement,and then influence its “work,retirement” choice,which is an intrinsic motivation for labor supply.But the direction of the impact is uncertain.Therefore,taking the tax reform as an opportunity,we will study the impact of individual income tax policy reform on the growing willingness of the elderly population to continue working from a micro perspective,and whether China can reduce the population structure and increase the economic growth of the population by increasing the labor supply of the elderly population.The phenomenon has far-reaching practical significance.This paper mainly organizes and analyzes the previous literature from three aspects.First,aging reduces the total supply of social labor by changing the age structure of the labor force,and thus restricts the speed of economic development.To alleviate this pressure,it is particularly important to improve the labor supply of the elderly population.Secondly,to improve the labor supply of the elderly population.The relevant research results of specific approaches are summarized.The solution proposed in the current literature ignores the improvement of the labor supply of the elderly by improving the income.Next,the paper analyzes the supply of social labor to the taxation policy.The impact of the relationship between the two is uncertain.Domestic research on taxation and labor supply is scarce,and the existing literature mainly targets young laborers.It is impossible to extend the conclusion to the work and retirement choices of middle-aged and elderly people.Through literature review,this paper believes that in the increasingly serious phenomenon of aging,finding ways to effectively improve the willingness of the elderly to continue working is an effective way to alleviate the current labor shortage.In these ways,the personal income tax policy acts as an intrinsic motivation that affects labor supply.Because there is a research gap,it is necessary to carry out relevant research to prove.Before the empirical research,this paper constructs a theoretical model and puts forward two basic assumptions: the reform of individual tax policy has a certain positive effect on improving the willingness of workers to continue working,and has no significant impact on the improvement of labor time.Based on the theoretical model,this paper conducts an empirical analysis.Through the propensity score matching(PSM),a balanced panel with a sample size of 3548 is constructed.The model is constructed by difference-in-difference method(DID).The results show that the reform of personal income tax policy has increased the willingness of middle-aged and older laborers to continue to work by 6.34%,but it has no significant impact on their working hours.In addition,this paper conducts a series of heterogeneity analysis and robustness test,and finally concludes that personal income tax reform can effectively improve the labor supply level of middle-aged and elderly people in China.Based on the results of empirical analysis,this paper argues that in the case of labor shortage,reforming the personal income tax policy will become another breakthrough to improve the labor supply of middle-aged and elderly people and reduce the negative impact of demographic dividends on economic development.Therefore,it is proposed to further improve the personal income tax policy from the internal will of the middle-aged and elderly people,and encourage government and institutions to formulate active and effective re-employment policies in order to provide more job choices for the retired labor force,and thus alleviate the negative impact of aging on economic development.