TY - JOUR
T1 - Long-term changes in married couples’ labor supply and taxes
T2 - Evidence from the US and Europe since the 1980s
AU - Bick, Alexander
AU - Brüggemann, Bettina
AU - Fuchs-Schündeln, Nicola
AU - Paule-Paludkiewicz, Hannah
N1 - Funding Information:
We thank our discussants Nezih Guner, Henry Siu, Giovanni Gallipoli, and Michelle Rendall, as well as Domenico Ferraro, Gustavo Ventura, and seminar and conference participants at Georgetown University, Virginia Commonwealth University, the Federal Reserve Bank of Richmond, the Carleton Macro-Finance Workshop, the SED Meeting 2018, the 2018 NBER International Seminar on Macroeconomics, the European Summer Meeting of the Econometric Society 2018, the Annual Meeting of the German Economic Association 2018, York University, Wilfrid Laurier University, the European Midwest Micro/Macro Conference, Queen's University, the CMSG Annual Meeting 2018, and the 5th Workshop of the Australasian Macroeconomics Society for helpful comments and suggestions. Enida Bajgoric, Pavlin Tomov, and Mariia Bondar provided excellent research assistantship. We thankfully acknowledge financial support from NORFACE under the DIAL programme, and from the Clusters of Excellence “Formation of Normative Orders” and “Sustainable Architecture for Finance in Europe” at Goethe University Frankfurt. All errors are ours.
Publisher Copyright:
© 2019 The Authors
PY - 2019/5
Y1 - 2019/5
N2 - We document the time-series of employment rates and hours worked per employed by married couples in the US and seven European countries (Belgium, France, Germany, Italy, the Netherlands, Portugal, and the UK) from the early 1980s through 2016. Relying on a model of joint household labor supply decisions, we quantitatively analyze the role of non-linear labor income taxes for explaining the evolution of hours worked of married couples over time, using as inputs the full country- and year-specific statutory labor income tax codes. We further evaluate the role of consumption taxes, gender and educational wage premia, and the educational composition. The model is quite successful in replicating the time series behavior of hours worked per employed married woman, with labor income taxes being the key driving force. It does however capture only part of the secular increase in married women's employment rates in the 1980s and early 1990s, suggesting an important role for factors not considered in this paper. An independent and important contribution of the paper is that we make the non-linear tax codes used as an input into the analysis available as a user-friendly and easily integrable set of Matlab codes.
AB - We document the time-series of employment rates and hours worked per employed by married couples in the US and seven European countries (Belgium, France, Germany, Italy, the Netherlands, Portugal, and the UK) from the early 1980s through 2016. Relying on a model of joint household labor supply decisions, we quantitatively analyze the role of non-linear labor income taxes for explaining the evolution of hours worked of married couples over time, using as inputs the full country- and year-specific statutory labor income tax codes. We further evaluate the role of consumption taxes, gender and educational wage premia, and the educational composition. The model is quite successful in replicating the time series behavior of hours worked per employed married woman, with labor income taxes being the key driving force. It does however capture only part of the secular increase in married women's employment rates in the 1980s and early 1990s, suggesting an important role for factors not considered in this paper. An independent and important contribution of the paper is that we make the non-linear tax codes used as an input into the analysis available as a user-friendly and easily integrable set of Matlab codes.
KW - Hours worked
KW - Taxation
KW - Two-earner households
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U2 - 10.1016/j.jinteco.2019.01.014
DO - 10.1016/j.jinteco.2019.01.014
M3 - Article
AN - SCOPUS:85062355821
VL - 118
SP - 44
EP - 62
JO - Journal of International Economics
JF - Journal of International Economics
SN - 0022-1996
ER -