Household Taxation, Income Splitting and Labor Supply Incentives: A Microsimulation Study for Germany

Viktor Steiner and Katharina Wrohlich

No 421, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: We analyze potential labor supply effects of a shift from the current German system of taxation of married couples to a system of limited real income splitting on the basis of econometric household labor supply model embedded in a tax-benefit model. Our simulation results show relatively small labor supply effects of a shift from the current system to one limited real income splitting system. In the benchmark scenario of a shift to separate taxation labor supply of wives would increase substantially in west Germany, while a significant number of husbands would drop out of the labor force.

JEL-codes: H24 H31 J22 (search for similar items in EconPapers)
Pages: 26 p.
Date: 2004
New Economics Papers: this item is included in nep-cmp and nep-lab
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Citations: View citations in EconPapers (166)

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Journal Article: Household Taxation, Income Splitting and Labor Supply Incentives – A Microsimulation Study for Germany (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwwpp:dp421

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