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

Klara Kaliskova

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: This study contributes to the female labor supply responsiveness literature by measuring the eect 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 the measure of extensive margin work incentives - the participation tax rate, which is then used as the main explanatory variable in a female participation equation. This allows me to deal with the endogeneity of income in a new way by 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 participation.

Keywords: female labor supply; tax and benefit system; Europe; instrumental variable (search for similar items in EconPapers)
JEL-codes: C25 H24 H31 J22 (search for similar items in EconPapers)
Date: 2014-12
New Economics Papers: this item is included in nep-eur, nep-lab, nep-lma, nep-pbe and nep-pub
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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 (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:cer:papers:wp524

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