SEMINAR SERIES
Applied Macroeconomics Seminar
Sun-Bin Kim（Professor, Yonsei University）
- Date&Time:
- 2019.9.27 (Fri) 16:30‐18:00
- Venue:
- 202, Instisute of Economic Reserch North Bldg., Yoshida Campus, Kyoto University
- Language:
- English
- Contact:
- Shinichi Nishiyama
Title:
"Macroeconomic Effects of Earned Income Tax Credit Policy: A Quantitative Analysis based on Heterogeneous Agent Life Cycle Model" (with Yongsung Chang and Jongsuk Han)
Abstract：
We analyze the macroeconomic effects of Earned Income Tax Credit (EITC) reform in Korea in 2019. The main features of the reform are abolishing the age restriction and relaxing the income and asset requirements. We build a heterogenous agents life-cycle model with labor supply adjustment along both extensive and intensive margins to examine effects of the reform not only on labor supply but also on aggregate variables. We calibrate the model to match the benchmark economy before the reform in 2018, and apply the new EITC scheme to quantify the aggregate variables changes from the benchmark. Employment rates increases but the working hours decrease under the reform. These changes are large for young, female single households. Aggregate output declines due to the reduction of aggregate capital and efficient unit of labors.