Income Taxation and Labor Supply: An Experiment on Couple's Work Effort

Melanie Schröder, Norma Schmitt, Britta Heynemann and Claudia Brünn

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: Complementary to microsimulation studies focusing on the impact of labor supply as a choice of hours worked we shed light on another variable that survey data are not capable of taking into account: the choice of work e ffort. Our aim is to investigate the eff ect of individual and joint taxation on partners' labor supply within an experimental setting. 116 participants (58 real couples) perform under a piece rate compensation on real e ffort tasks in two stages. The couple's income is taxed jointly for one stage and individually for the other. Surprisingly, our data reveal that men, when being in the position of a secondary earner, are more susceptible to changes in tax scheme while women do not react to a change in tax scheme at all. Besides the male breadwinner model we also demonstrate that fairness considerations play a role.

JEL-codes: C93 H31 J22 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-exp and nep-pub
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