Tax and Transfer Policies and the Female Labor Supply in the EU

Klara Kaliskova

No 8949, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This study contributes to the female labor supply responsiveness literature by measuring the effect of tax-benefit policies on female labor supply based on a broad sample of 26 European countries in 2005-2010. The tax-benefit microsimulation model EUROMOD is used to calculate a measure of work incentives at the extensive margin – the participation tax rate, which is then used as the main explanatory variable in a female employment equation. This allows me to deal with the endogeneity of income in a new way by using a simulated instrumental variable based on a fixed EU-wide sample of women. Results suggest that a 10 percentage point increase in the participation tax rate decreases the female employment probability by 2 percentage points. The effect is higher for single mothers, for women in the middle of the skills distribution, and in countries that have lower rates of female employment.

Keywords: instrumental variable; female labor supply; tax and benefit system; Europe (search for similar items in EconPapers)
JEL-codes: C25 H24 H31 J22 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2015-03
New Economics Papers: this item is included in nep-eur, nep-lma, nep-pbe and nep-pub
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Published - published in: Empirical Economics, 2020, 58, 749 -775

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Related works:
Journal Article: Tax and transfer policies and the female labor supply in the EU (2020)
Working Paper: Tax and Transfer Policies and the Female Labor Supply in the EU (2014)
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