The lock-in effect of marriage: Work incentives after saying, “Yes, I do.â€

Michael Christl, Silvia De Poli and Viginta Ivaškaitė-Tamošiūnė

No 615, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: In this paper, we use EUROMOD, the tax-benefit microsimulation model of the European Union,to investigate the impact of marriage-related tax-benefit instruments on the labour supply of married couples. For each married partner, we estimate their individual marginal effective tax rateand net replacement rate before and after marriage. We show that the marriage bonus, which iseconomically significant in eight European countries, decreases the work incentives for womenand, particularly, on the intensive margin. In contrast, the incentives on the intensive marginincrease for men once they are married, pointing to the marriage-biased and gender-biased taxbenefit structures in the analysed countries. Our results suggest that marriage bonuses contributeto a lock-in effect, where second earners, typically women, are incentivised to work less, withnegative economic consequences.

Keywords: marriage; cohabitation; marriage bonus; work incentives; gender; tax-benefit system; labour supply; Europe (search for similar items in EconPapers)
JEL-codes: H31 J12 J22 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2022-07
New Economics Papers: this item is included in nep-eur and nep-lma
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