Arbeitspapier

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

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 non-linearities 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.

Language
Englisch

Bibliographic citation
Series: CESifo Working Paper ; No. 6325

Classification
Wirtschaft
Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
Taxation, Subsidies, and Revenue: General
Fiscal Policies and Behavior of Economic Agents: Household
Marriage; Marital Dissolution; Family Structure; Domestic Abuse
Time Allocation and Labor Supply
Subject
taxation
two-earner households
hours worked

Event
Geistige Schöpfung
(who)
Bick, Alexander
Fuchs-Schündeln, Nicola
Event
Veröffentlichung
(who)
Center for Economic Studies and ifo Institute (CESifo)
(where)
Munich
(when)
2017

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Bick, Alexander
  • Fuchs-Schündeln, Nicola
  • Center for Economic Studies and ifo Institute (CESifo)

Time of origin

  • 2017

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