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Quantifying the Disincentive Effects of Joint Taxation on Married Women's Labor Supply

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  • Alexander Bick
  • Nicola Fuchs-Schündeln

Abstract

We quantify the disincentive effects of elements of joint taxation in the labor income tax codes of 17 European countries and the US. We analyze the extent to which hours worked of married men and women would change if each country switched to a system of separate taxation of married couples. In this hypothetical tax reform, we keep the average tax burden of married households constant. With the exception of four countries featuring already a system of separate taxation, the model predicts that married women's hours worked increase on average by 115 hours, or 10.5 percent, through this reform.

Suggested Citation

  • Alexander Bick & Nicola Fuchs-Schündeln, 2017. "Quantifying the Disincentive Effects of Joint Taxation on Married Women's Labor Supply," American Economic Review, American Economic Association, vol. 107(5), pages 100-104, May.
    • Handle: RePEc:aea:aecrev:v:107:y:2017:i:5:p:100-104
    Note: DOI: 10.1257/aer.p20171063
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    References listed on IDEAS

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    1. Alexander Bick & Nicola Fuchs-Schündeln, 2018. "Taxation and Labour Supply of Married Couples across Countries: A Macroeconomic Analysis," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(3), pages 1543-1576.
    2. Nada Eissa, 1995. "Taxation and Labor Supply of Married Women: The Tax Reform Act of 1986 as a Natural Experiment," NBER Working Papers 5023, National Bureau of Economic Research, Inc.
    3. Nada Eissa, 1996. "Labor Supply and the Economic Recovery Tax Act of 1981," NBER Chapters, in: Empirical Foundations of Household Taxation, pages 5-38, National Bureau of Economic Research, Inc.
    4. Francine D. Blau & Lawrence M. Kahn, 2013. "Female Labor Supply: Why Is the United States Falling Behind?," American Economic Review, American Economic Association, vol. 103(3), pages 251-256, May.
    5. Remzi Kaygusuz, 2010. "Taxes and Female Labor Supply," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(4), pages 725-741, October.
    6. Nezih Guner & Remzi Kaygusuz & Gustavo Ventura, 2012. "Taxation and Household Labour Supply," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(3), pages 1113-1149.
    7. Martin Feldstein & James M. Poterba, 1996. "Empirical Foundations of Household Taxation," NBER Books, National Bureau of Economic Research, Inc, number feld96-1.
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    Cited by:

    1. Akitoby Bernardin & Honda Jiro & Miyamoto Hiroaki, 2022. "Countercyclical fiscal policy and gender employment: evidence from the G-7 countries," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 12(1), pages 1-23, January.
    2. Alexander Bick & Nicola Fuchs-Schündeln, 2018. "Taxation and Labour Supply of Married Couples across Countries: A Macroeconomic Analysis," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(3), pages 1543-1576.
    3. Alexander Bick & Nicola Fuchs-Schündeln & David Lagakos & Hitoshi Tsujiyama, 2019. "Why are Average Hours Worked Lower in Richer Countries?," NBER Working Papers 26554, National Bureau of Economic Research, Inc.
    4. Bick, Alexander & Brüggemann, Bettina & Fuchs-Schündeln, Nicola & Paule-Paludkiewicz, Hannah, 2019. "Long-term changes in married couples' labor supply and taxes: Evidence from the US and Europe since the 1980s," Journal of International Economics, Elsevier, vol. 118(C), pages 44-62.
    5. Gimenez-Nadal, José Ignacio & Molina, José Alberto, 2020. "The Gender Gap in Time Allocation in Europe," IZA Discussion Papers 13461, Institute of Labor Economics (IZA).
    6. Bredemeier, Christian & Ndlovu, Patrick & Vujic, Suncica & Winkler, Roland, 2024. "Household Decisions and the Gender Gap in Job Satisfaction," IZA Discussion Papers 16760, Institute of Labor Economics (IZA).
    7. Christl, Michael & De Poli, Silvia & Ivaškaitė-Tamošiūnė, Viginta, 2021. "Does it pay to say "I do"? Marriage bonuses and penalties across the EU," GLO Discussion Paper Series 906, Global Labor Organization (GLO).
    8. Dirk Krueger & Alexander Ludwig & Irina Popova, 2024. "Shaping Inequality and Intergenerational Persistence of Poverty: Free College or Better Schools," PIER Working Paper Archive 24-023, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    9. KAWAGUCHI Daiji & TORIYABE Takahiro, 2018. "Parental Leaves and Female Skill Utilization: Evidence from PIAAC," Discussion papers 18003, Research Institute of Economy, Trade and Industry (RIETI).
    10. Berga, Helen & Abdisa, Lamessa T., 2022. "Assessing Gender Gap in Wage and Self-Employment: Evidence from Ethiopia," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 31(01), April.
    11. Martin Beznoska, 2024. "Testing the Income Pooling Hypothesis and its Link to the Taxation of Couple Households: Evidence from Demand System Estimation for Germany," Journal of Family and Economic Issues, Springer, vol. 45(3), pages 687-719, September.
    12. Doorley, Karina, 2018. "Taxation, Work and Gender Equality in Ireland," IZA Discussion Papers 11495, Institute of Labor Economics (IZA).
    13. Mattis Beckmannshagen & Rick Glaubitz, 2023. "Is There a Desired Added Worker Effect?: Evidence from Involuntary Job Losses," SOEPpapers on Multidisciplinary Panel Data Research 1200, DIW Berlin, The German Socio-Economic Panel (SOEP).
    14. Liu, Guanchun & Liu, Hangjuan & Liu, Yuanyuan & Yang, Jinyu & Zhang, Yanren, 2024. "Personal income tax and corporate innovation: The key role of inventors’ financial incentives," Journal of Banking & Finance, Elsevier, vol. 164(C).
    15. Annekatrin Schrenker, 2022. "Do Women Expect Wage Cuts for Part-time Work?," Discussion Papers of DIW Berlin 2024, DIW Berlin, German Institute for Economic Research.
    16. Gimenez-Nadal, Jose Ignacio & Molina, José Alberto, 2021. "How do women allocate their available time in Europe? Differences with men," GLO Discussion Paper Series 908, Global Labor Organization (GLO).
    17. Charlotte H. Feldhoff, 2021. "The Child Penalty: Implications of Parenthood on Labour Market Outcomes for Men and Women in Germany," SOEPpapers on Multidisciplinary Panel Data Research 1120, DIW Berlin, The German Socio-Economic Panel (SOEP).
    18. Juan Carlos Campaña & Jose Ignacio Gimenez-Nadal & Jorge Velilla, 2023. "Measuring Gender Gaps in Time Allocation in Europe," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 165(2), pages 519-553, January.
    19. Michelle Barrett & Karina Doorley & Paul Redmond & Barra Roantree, 2022. "How Has the Gender Earnings Gap in Ireland Changed in Thirty Years?," Social Sciences, MDPI, vol. 11(8), pages 1-21, August.
    20. Schrenker, Annekatrin, 2023. "Do women expect wage cuts for part-time work?," Labour Economics, Elsevier, vol. 80(C).

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    More about this item

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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