DISTRIBUTION OF EFFECTIVE MARGINAL TAX RATES ACROSS THE AUSTRALIAN LABOUR FORCE

Abstract

In most developed countries there were substantial rises in unemployment rates in the late 1980s and early 1990s. The incentives to enter or leave employment is therefore a common area of study. Effective marginal tax rates are often used by social policy analysts to examine the existence and severity of poverty traps. Most work in this area has focused on the theoretical effective marginal tax rates faced by a group of hypothetical families. This study examines the distribution of effective marginal tax rates across the Australian population, and was prepared for an OECD comparative study of the rates faced by the actual or potential workforces in OECD economies. The data used for this analysis are derived from the STINMOD database. STINMOD is NATSEM’s publicly available static microsimulation model.