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What's Best for Women: Gender Based Taxation, Wage Subsidies or Basic Income?

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  • Colombino, Ugo

    (University of Turin)

  • Narazani, Edlira

    (University of Turin)

Abstract

We use a microeconometric model of household labour supply in order to evaluate, with Italian data, the behavioural and welfare effects of gender based taxation (GBT) as compared to other policies based on different optimal taxation principles. The comparison is interesting because GBT, although technically correct, might face implementation difficulties not shared by other policies that in turn might produce comparable benefits. The simulation procedure accounts for the constraints implied by fiscal neutrality and market equilibrium. Our results support to some extent the expectations of GBT's proponents. However it is not an unquestionable success. GBT induces a modest increase of women's employment, but similar effects can be attained by universal subsidies on low wages. When the policies are evaluated in terms of welfare, GBT ranks first among single women but for the whole population the best policies are subsidies on low wages, unconditional transfers or a combination of the two.

Suggested Citation

  • Colombino, Ugo & Narazani, Edlira, 2012. "What's Best for Women: Gender Based Taxation, Wage Subsidies or Basic Income?," IZA Discussion Papers 6828, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp6828
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    9. Colombino Ugo & Locatelli Marilena & Narazani Edlira & O'Donoghue Cathal, 2010. "Alternative Basic Income Mechanisms: An Evaluation Exercise With a Microeconometric Model," Basic Income Studies, De Gruyter, vol. 5(1), pages 1-31, September.
    10. Peter Diamond & Emmanuel Saez, 2011. "The Case for a Progressive Tax: From Basic Research to Policy Recommendations," Journal of Economic Perspectives, American Economic Association, vol. 25(4), pages 165-190, Fall.
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    15. Aaberge, Rolf & Colombino, Ugo & Strom, Steinar, 1999. "Labour Supply in Italy: An Empirical Analysis of Joint Household Decisions, with Taxes and Quantity Constraints," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(4), pages 403-422, July-Aug..
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    More about this item

    Keywords

    gender based taxation; wage subsidies; basic income; guaranteed minimum income; labour supply; social welfare;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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