An Evaluation of the Tax-Transfer Treatment of Married Couples in European Countries

Herwig Immervoll, Henrik Jacobsen Kleven, Claus Kreiner and Nicolaj Verdelin
Additional contact information
Henrik Jacobsen Kleven: London School of Economics
Nicolaj Verdelin: Department of Economics, University of Copenhagen

No 08-03, EPRU Working Paper Series from Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics

Abstract: This paper presents an evaluation of the tax-transfer treatment of married couples in 15 EU countries using the EUROMOD microsimulation model. First, we show that many tax-transfer schemes in Europe feature negative jointness defined as a situation where the tax rate on one person depends negatively on the earnings of the spouse. This stands in contrast to the previous literature on this question, which has focused on a specific form of positive jointness. The presence of negative jointness is driven by family-based and means-tested transfer programs combined with tax systems that usually feature very little jointness. Second, we consider the labor supply distortion on secondary earners relative to primary earners implied by the current tax-transfer systems, and study the welfare effects of small reforms that change the relative taxation of spouses. By adopting a small-reform methodology, it is possible to set out a simple analysis based on more realistic labor supply models than those considered in the existing literature. We present microsimulations showing that simple revenue-neutral reforms that lower the tax burden on secondary earners are associated with substantial welfare gains in most countries. Finally, we consider the tax-transfer implications of marriage and estimate the so-called marriage penalty. For most countries, we find large marriage penalties at the bottom of the distribution driven primarily by features of the transfer system.

Pages: 29 pages
Date: 2008-09
New Economics Papers: this item is included in nep-eec
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://web.econ.ku.dk/eprn_epru/Workings_Papers/wp-08-03.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://web.econ.ku.dk/eprn_epru/Workings_Papers/wp-08-03.pdf [301 Moved permanently]--> https://web.econ.ku.dk/eprn_epru/Workings_Papers/wp-08-03.pdf)

Related works:
Working Paper: An Evaluation of the Tax-Transfer Treatment of Married Couples in European Countries (2009)
Working Paper: An Evaluation of the Tax-Transfer Treatment of Married Couples in European Countries (2009)
Working Paper: An evaluation of the tax-transfer treatment of married couples in European countries (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kud:epruwp:08-03

Access Statistics for this paper

More papers in EPRU Working Paper Series from Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics �ster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Hoffmann (thho@kb.dk).