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Taxation and Labor Supply of Married Couples across Countries: A Macroeconomic Analysis

Alexander Bick and Fuchs-Schündeln, Nicola ()
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Fuchs-Schündeln, Nicola: Goethe University Frankfurt

No 10504, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We document contemporaneous differences in the aggregate labor supply of married couples across 17 European countries and the US. Based on a model of joint household decision making, we quantify the contribution of international differences in non-linear labor income taxes and consumption taxes to the international differences in hours worked in the data. Through the lens of the model, taxes, together with wages and the educational composition, account for a significant part of the small differences in married men's and the large differences in married women's hours worked in the data. Taking the full nonlinearities of labor income tax codes, including the tax treatment of married couples, into account is crucial for generating the low cross-country correlation between married men's and women's hours worked in the data, and for explaining the variation of married women's hours worked across European countries.

Keywords: taxation; two-earner households; hours worked (search for similar items in EconPapers)
JEL-codes: E60 H20 H31 J12 J22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur, nep-lma, nep-mac, nep-pbe and nep-pub
Date: 2017-01
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Related works:
Journal Article: Taxation and Labour Supply of Married Couples across Countries: A Macroeconomic Analysis (2018) Downloads
Working Paper: Taxation and Labor Supply of Married Couples across Countries: A Macroeconomic Analysis (2017) Downloads
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