TY - JOUR
T1 - Taxation and labour supply of married couples across countries
T2 - A macroeconomic analysis
AU - Bick, Alexander
AU - Fuchs-Schündeln, Nicola
N1 - Funding Information:
Acknowledgments. We thank Domenico Ferraro, Berthold Herrendorf, Paul Klein, Dirk Krueger, José-Víctor Ríos-Rull, Richard Rogerson, Kjetil Storesletten, the editor and four anonymous referees, as well as numerous seminar and conference participants for helpful comments and suggestions. Bettina Brüggemann and Hannah Paule-Paludkiewicz provided truly outstanding research assistance with the data, and Enida Bajgoric, Pavlin Tomov, and Desiree Winges with the tax codes. The authors gratefully acknowledge financial support from the Cluster of Excellence “Formation of Normative Orders” at Goethe University and the European Research Council under Starting Grant No. 262116. Alexander Bick further thanks the Research Department of the Federal Reserve Bank of Minneapolis for the hospitality, and the Fritz Thyssen Foundation for the financial support of that stay. All errors are ours.
Publisher Copyright:
© The Author 2017. Published by Oxford University Press on behalf of The Review of Economic Studies Limited.
PY - 2018/7/1
Y1 - 2018/7/1
N2 - We document contemporaneous differences in the aggregate labour supply of married couples across seventeen European countries and the U.S. Based on a model of joint household decision making, we quantify the contribution of international differences in non-linear labour 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 labour 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.
AB - We document contemporaneous differences in the aggregate labour supply of married couples across seventeen European countries and the U.S. Based on a model of joint household decision making, we quantify the contribution of international differences in non-linear labour 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 labour 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.
KW - Hours worked
KW - Taxation
KW - Two-earner households
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U2 - 10.1093/restud/rdx057
DO - 10.1093/restud/rdx057
M3 - Article
AN - SCOPUS:85050754808
SN - 0034-6527
VL - 85
SP - 1543
EP - 1576
JO - Review of Economic Studies
JF - Review of Economic Studies
IS - 3
ER -