The Impact Of Personal Income Tax Reform On Labor Supply

Since the reform and opening up,China's economic construction has made remarkable achievements,the income of residents has increased significantly,but there are also signs of widening the gap between the rich and the poor.As a tool to regulate income redistribution,individual income tax plays an important role in the field of income redistribution.The 19 th National Congress of the Communist Party of China pointed out that China's economy has changed from high-speed growth to high-quality development,and expanding the middle-income group is an inevitable requirement to promote high-quality economic development.To expand the middle-income group,we should rely on the existing distribution system and redistribution system.Since the promulgation of the individual income tax law of the People's Republic of China in1980,China's individual income tax system has undergone many reforms.The reform of the individual income tax system will have a profound impact on the pattern of income redistribution,which is reflected not only in the income redistribution effect of the individual income tax reform,but also in the labor supply effect of the reform.This paper focuses on the effect of individual income tax reform on labor supply of different income groups.Based on the psm-did econometric model,this paper discusses the impact of individual income tax reform on the decision-making of individual labor supply in 2011 by using the data of CFPS phase III survey.The results show that the labor participation rate of the groups affected by the tax reform has increased by 1.1%,and the labor time is not significantly affected by the tax reform.Further analysis shows that the labor participation rate of the group with an income of 5000-12500 yuan has significantly increased by 2.5%,which is far higher than the average level of the sample.The labor participation rate of the group with an income of 2000-5000 yuan has increased by 1.0%,which is slightly lower than the average level of the sample.This means that the personal tax reform has a greater incentive effect on the labor supply of the high-income group,and the tax reform has a greater incentive effect on the labor supply of the middle-income group The effect is relatively weak.In the part of heterogeneity analysis,the labor participation rates of women,public sector and urban areas affected by the personal tax reform increased by 1.3%,1.0% and 1.2% respectively.Both the common trend test and the placebo test show that the empirical results are robust.The empirical results provide relevant policy suggestions for expanding the scale of middle-income groups and promoting the transformation of economy to high-quality development stage.