Taxation and labor force participation: the case of Italy

Fabrizio Colonna () and Stefania Marcassa
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Fabrizio Colonna: Bank of Italy

No 191, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: Women�s labor force participation is lowest in Italy among the OECD countries. Moreover, the participation rate of married women is positively correlated with their husbands' income. We show that high tax rates together with tax credits and transfers raise the burden for 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, provisions for a working tax credit and gender-based taxation boost it; the effects of the former are concentrated among women with little schooling.

Keywords: female labor force participation; taxation. (search for similar items in EconPapers)
JEL-codes: H31 J21 J22 (search for similar items in EconPapers)
Date: 2013-06
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Taxation and Labor Force Participation: The Case of Italy (2013)
Working Paper: Taxation and Labor Force Participation: The Case of Italy (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:opques:qef_191_13

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