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Income Taxation and Labor Supply: An Experiment on Couple's Work Effort

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  • Schröder, Melanie
  • Schmitt, Norma
  • Heynemann, Britta
  • Brünn, Claudia

Abstract

Complementary to microsimulation studies focusing on the impact of labor supply as a choice of hours worked we shed light on another variable that survey data are not capable of taking into account: the choice of work e ffort. Our aim is to investigate the eff ect of individual and joint taxation on partners' labor supply within an experimental setting. 116 participants (58 real couples) perform under a piece rate compensation on real e ffort tasks in two stages. The couple's income is taxed jointly for one stage and individually for the other. Surprisingly, our data reveal that men, when being in the position of a secondary earner, are more susceptible to changes in tax scheme while women do not react to a change in tax scheme at all. Besides the male breadwinner model we also demonstrate that fairness considerations play a role.

Suggested Citation

  • Schröder, Melanie & Schmitt, Norma & Heynemann, Britta & Brünn, Claudia, 2013. "Income Taxation and Labor Supply: An Experiment on Couple's Work Effort," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79735, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc13:79735
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    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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