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Why Are Mothers Working Longer Hours in Austria than in Germany? A Comparative Micro Simulation Analysis

Helene Dearing (), Helmut Hofer, Christine Lietz (), Rudolf Winter-Ebmer () and Katharina Wrohlich ()
Additional contact information
Helene Dearing: IHS - Institute for Advanced Studies, Vienna
Christine Lietz: IHS - Institute for Advanced Studies, Vienna

No 2845, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Labor force participation rates of mothers in Austria and Germany are similar, however full-time employment rates are much higher among Austrian mothers. In order to find out to what extent these differences can be attributed to differences in the tax transfer-system, we perform a comparative micro simulation exercise. After estimating structural labor supply models of both countries, we interchange two important institutional characteristics of the two countries, namely (i) the definition of the tax unit within the personal income tax and (ii) the parental leave benefit scheme. As our analysis shows, differences in mothers’ employment patterns can partly be explained by the different tax systems: While Germany has a system of joint taxation with income splitting for married couples, Austria taxes everyone individually, which leads to lower marginal tax rates for secondary earners than the German system.

Keywords: Austria; income taxation; family policy; micro simulation; labor supply; Germany (search for similar items in EconPapers)
JEL-codes: J22 H31 H24 (search for similar items in EconPapers)
Date: 2007-06
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Published in: Fiscal Studies, 2007, 28 (4), 463-495

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Related works:
Journal Article: Why Are Mothers Working Longer Hours in Austria than in Germany? A Comparative Microsimulation Analysis* (2007) Downloads
Working Paper: Why Are Mothers Working Longer Hours in Austria than in Germany?: A Comparative Micro Simulation Analysis (2007) Downloads
Working Paper: Why are Mothers Working Longer Hours in Austria than in Germany? A Comparative Micro Simulation Analysis (2007) Downloads
Working Paper: Why are mothers working longer hours in Austria than in Germany? A comparative micro simulation analysis (2007) Downloads
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