Taxation and Labor Force Participation: The Case of Italy

Fabrizio Colonna () and Stefania Marcassa ()
Additional contact information
Fabrizio Colonna: Banca d'Italia
Stefania Marcassa: Paris School of Economics

No 2011-021, Working Papers from Human Capital and Economic Opportunity Working Group

Abstract: Italy has the lowest labor force participation of women among OECD 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; marginal tax rate; joint taxation; gender-based taxation; working tax credit (search for similar items in EconPapers)
Date: 2011-07
New Economics Papers: this item is included in nep-acc, nep-eur, nep-lab, nep-lma, nep-pbe and nep-pub
Note: FI
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://humcap.uchicago.edu/RePEc/hka/wpaper/Colonn ... tion-labor-force.pdf First version, July 31, 2011 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hka:wpaper:2011-021

Access Statistics for this paper

More papers in Working Papers from Human Capital and Economic Opportunity Working Group Contact information at EDIRC.
Bibliographic data for series maintained by Jennifer Pachon ().