Labour Supply and Taxation with Restricted Choices ∗

  title={Labour Supply and Taxation with Restricted Choices ∗},
  author={Magali Beffy and Richard W. Blundell and Antoine Bozio and Guy Laroque},
A model of labour supply and consumption is developed in which individuals face restrictions on the offer distribution of possible hours choices. Observed hours reflect both the distribution of preferences and the distribution of offers. The choice set is limited and observed hours will not necessarily satisfy the conditions for optimal choice. The leading example we consider is of individuals selecting from at most two offers. We illustrate this in a labour supply model with nonlinear budget… CONTINUE READING