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

American Economic Review: Papers & Proceedings, Vol. 107, No. 5, pp. 100-104

Authors:
Alexander Bick,
Nicola Fuchs-Schündeln
Research Area:
Macro and Finance
Date:
May 2017
Keywords:
Tax Law, Fiscal Policies, Behavior of Economic Agents, Household
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.

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