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Analyzing Female Labor Supply: Evidence from a Dutch Tax Reform

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  • Bosch, Nicole

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • van der Klaauw, Bas

    (Vrije Universiteit Amsterdam)

Abstract

Among OECD countries, the Netherlands has average female labor force participation, but by far the highest rate of part-time work. This paper investigates the extent to which married women respond to financial incentives. We exploit the exogenous variation caused by a substantial Dutch tax reform in 2001. Our main conclusion is that the positive significant effect of tax reform on labor force participation dominates the negative insignificant effect on working hours. Our preferred explanation is that women respond more to changes in tax allowances than to changes in marginal tax rates.

Suggested Citation

  • Bosch, Nicole & van der Klaauw, Bas, 2009. "Analyzing Female Labor Supply: Evidence from a Dutch Tax Reform," IZA Discussion Papers 4238, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4238
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    More about this item

    Keywords

    uncompensated wage elasticity; labor force participation; working hours; endogeneity;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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