The Analysis of the Impacts of China’s Personal Income Tax System on Labor Supply of Urban Dweller

Yang BAI


The impact of taxation on labor supply depends on the income effect and substitution effect after taxation. However, the two effects will be different under various tax systems. This paper intends to analyze the impacts of personal income tax on labor supply of urban dweller under Chinese tax system. This paper use theoretical and empirical analysis method to analyze this problem. We conclude that the income effect is greater than substitution effect under in China, and then we put forward some relevant suggestions.


Personal income tax; Urban dweller; Income effect; Substitution effect

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