Optimal Taxation, Marriage, Home Production, and Family Labor Supply

Andrew Shephard and George-Levi Gayle ()

No 882, 2015 Meeting Papers from Society for Economic Dynamics

Abstract: This paper develops an empirical approach to optimal income taxation design within an equilibrium collective marriage market model. Taxes distort labour supply and time allocation decisions, as well as marriage market outcomes, and the within household decision process. Using data from the American Community Survey and American Time Use Survey we structurally estimate our model and explore empirical design problems. We consider the optimal design problem when the planner is able to condition taxes on marital status, as in the U.S. tax code, but for married couples we allow for an arbitrary form of tax jointness. We also show how design problem changes when we introduce cohabitation as an alternative state, offering many of the same economic benefits of marriage, but with the informational friction that forces individuals in the cohabitation and single state to be subject to the same tax schedule.

Date: 2015
New Economics Papers: this item is included in nep-pbe and nep-pub
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Related works:
Journal Article: Optimal Taxation, Marriage, Home Production, and Family Labor Supply (2019)
Working Paper: Optimal Taxation, Marriage, Home Production, and Family Labor Supply (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed015:882

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