Household Sector
Recently completed research
Supervisor: Professor Panos Pashardes
During 2010, research conducted by the Household Sector included the study of the cost and value of health care in Cyprus, the analysis of labour supply in Cyprus and the relationship between labour supply and taxation in Cyprus.
Cost and Value of Health Care in Cyprus
This paper analyses factors affecting the level of household health expenditure in Cyprus, with emphasis on the type of cover of household members. The implications of individuals’ entitlement to free public care for the well-being of households are also investigated to determine the value of free medical care, as perceived by consumers.
The results of this research are presented in:
Labour Supply in Cyprus
This paper estimates labour supply functions for males and females in Cyprus drawing data from the 2007 EU-SILC database and computes the income and wage elasticities of different groups based on the age and the age of the youngest dependent child of individuals. The results show that labour supply is relatively more responsive to wage changes among women, especially among those with young children, and persons in the 55-64 age group. The total, (income and substitution) effect of a wage rate increase on labour supply is negative for men and positive for women. Thus, in-work benefits to women can increase working hours, while the opposite is true for men. This is especially true for women with young dependent children. In contrast, we find that policies aimed at increasing the non-labour income of individuals can decrease working hours.
The results of this research are presented in:
Pashardes P. and A. Polycarpou,
"Labour Supply in Cyprus", Economic Analysis Papers No. 05-10, Economics Research Centre, University of Cyprus, October 2010.
Taxation, Labour Supply and Welfare: A micro-simulation analysis for Cyprus
In this paper we investigate the effect of three revenue equivalent tax systems on labour market participation, working hours and welfare: (i) a progressive tax system with high income allowance, (ii) a progressive tax system with family related allowances and (iii) a proportional taxation. For this we combine a structural labour supply with a micro-simulation model and use data drawn from the 2007 EU-SILC database. The results show that the “best” regime for improving labour supply is proportional taxation, as it generates a small decrease in working hours and participation, while the deadweight loss is low and mostly negative. The most suitable system for improving the participation rate, especially of females or individuals over 55, appears to be progressive taxation with high income allowance; while the working hours of these groups are most increased with a proportional tax system. On the other hand, a progressive tax system combined with high income allowance is most suitable for decreasing income inequality.
The results of this research are presented in:
Current Research
Supervisor: Professor Panos Pashardes
Household borrowing and economic crisis
This project will examine issues relating to the borrowing of households in Cyprus, in the context of a model derived from consumer theory, in order to assess the factors that determine the borrowing behaviour of households and the extent to which borrowing reflects to the credit capacity of households. The analysis is expected to yield conclusions about the problem of irrational (myopic) borrowing behavior of households, which is considered to be one of the most important factors that led to the current global economic crisis.
Social Benefit Targeting, Inequality and Poverty
It is a fact that up until today there has been no systematic research to document the effectiveness of social benefits in Cyprus. That is, to answer the questions about the extent to which social benefits end up in the hands of people who do not truly need them; and how effective is government intervention (through social policy measures) towards redistributing income and combating poverty and social exclusion. The waste of government resources from the fact that non-beneficiaries receive benefits will be assessed and measures to address the problem will be proposed.