Taxation and Labor Supply of Married Women: A Cross-Country Analysis

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 06.06.2012, 12:15 - 13:30


Presentation by 

Nicola Fuchs-Schündeln (Goethe University Frankfurt)


We document contemporaneous differences in the labor supply of married women across 13 OECD countries, and find that they are substantial, amounting to 540 hours between the maximum and the minimum observations in our sample. We build a simple model of married females' labor supply in order to analyze which factors drive these differences. Four inputs into the model vary internationally, namely male and female wages, as well as consumption taxes and labor income taxes. Regarding the latter, we use detailed non-linear tax codes of the respective countries as an input. We find that the model is able to explain a large part of the observed differences in married females' labor supply between the US and Central Europe or Scandinavia, respectively, but cannot explain the low labor supply of married women in Southern Europe. A decomposition analysis underlines the importance of taxation. We further analyze the role of differences in average tax rates vs. differences in the marginal tax rate schedules, and investigate the effects of joint taxation of married couples.

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