Taxation and Labor Force Participation: The Case of Italy

Fabrizio Colonna and Stefania Marcassa

No 1203, CEPREMAP Working Papers (Docweb) from CEPREMAP

Abstract: Italy has the lowest labor force participation of women among European countries. Moreover, the participation rate of married women is positively correlated to their husbands’ income. We show that a high tax schedule together with tax credits and transfers raise the burden of two-earner households, generating disincentives to work. We estimate a structural labor supply model for women, and use the estimated parameters to simulate the effects of alternative revenue-neutral tax systems. We find that joint taxation implies a drop in the participation rate. Conversely, working tax credit and gender-based taxation boost it, with the effects of the former concentrated on low educated women.

Keywords: female labor force participation; Italian tax system; second earner tax rate; joint taxation; gender-based taxation; working tax credit (search for similar items in EconPapers)
JEL-codes: H31 J21 J22 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2012-06
New Economics Papers: this item is included in nep-dem, nep-eur, nep-lab, nep-lma and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Working Paper: Taxation and labor force participation: the case of Italy (2013)
Working Paper: Taxation and Labor Force Participation: The Case of Italy (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:cpm:docweb:1203

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