The effects of separate taxation on labor participation of married couples. An empirical analysis using propensity score

Amadeo Fuenmayor, Rafael Granell and Mauro Mediavilla
Additional contact information
Mauro Mediavilla: University of Valencia

Review of Economics of the Household, 2018, vol. 16, issue 2, No 14, 561 pages

Abstract: Abstract Up to 1987 the Spanish Income Tax imposed compulsory joint filing for married couples. However, the 1988 reform allowed spouses to choose between joint and separate taxation, involving a reduction in tax rates for secondary earners. Our aim is to analyze this reform as a quasi-natural experiment, assessing the effects of tax changes on labor participation. To find out the causal effect we adopt the difference-in-differences technique. We use data from the ‘Spanish Income Tax Panel 1982–1998’. Our results show that, as a consequence of differential tax changes, married women in families more strongly affected by the fiscal reform increase their labor participation more than secondary earners from families less affected by the reform. The participation rate for secondary earners in the treatment group increases by 9.4 percentage points whereas the control group increases their participation rate by 7.8 percentage points. We define the treatment group as those secondary earners in relatively low-income families in year 1987 and the control group as those in middle-high income families, because the former experiences a stronger reduction in tax rates than the latter. As a result, we can attribute the 1.6-percentage-point-increase in participation rates to the 1988 income tax reform.

Keywords: Income tax; Treatment effects; Propensity score; Joint filing; Tax unit (search for similar items in EconPapers)
JEL-codes: C15 H24 H31 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://link.springer.com/10.1007/s11150-016-9345-x Abstract (text/html)
Access to full text is restricted to subscribers.

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:kap:reveho:v:16:y:2018:i:2:d:10.1007_s11150-016-9345-x

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/11150/PS2

DOI: 10.1007/s11150-016-9345-x

Access Statistics for this article

Review of Economics of the Household is currently edited by Shoshana Grossbard

More articles in Review of Economics of the Household from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().