Taxation and labour supply of married couples across countries: A macroeconomic analysis

Alexander Bick, Nicola Fuchs-Schündeln

Research output: Contribution to journalArticle

8 Citations (Scopus)

Abstract

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.

Original languageEnglish (US)
Pages (from-to)1543-1576
Number of pages34
JournalReview of Economic Studies
Volume85
Issue number3
DOIs
StatePublished - Jul 1 2018

Fingerprint

Taxation
Labor supply
Hours worked
Macroeconomics
Labor income
European countries
Income tax
Tax
Household decision making
Wages
Education
Nonlinearity
Consumption tax

Keywords

  • Hours worked
  • Taxation
  • Two-earner households

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Taxation and labour supply of married couples across countries : A macroeconomic analysis. / Bick, Alexander; Fuchs-Schündeln, Nicola.

In: Review of Economic Studies, Vol. 85, No. 3, 01.07.2018, p. 1543-1576.

Research output: Contribution to journalArticle

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