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Taxation and household labour supply

Güner, Nezih and Kaygusuz, Remzi and Ventura, Gustavo (2012) Taxation and household labour supply. Review of Economic Studies, 79 (3). pp. 1113-1149. ISSN 0034-6527 (Print) 1467-937X (Online)

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Official URL: http://dx.doi.org/10.1093/restud/rdr049

Abstract

We evaluate reforms to the U.S. tax system in a life cycle set-up with heterogeneous married and single households and with an operative extensive margin in labour supply. We restrict our model with observations on gender and skill premia, labour-force participation of married females across skill groups, children, and the structure of marital sorting. We concentrate on two revenue-neutral tax reforms: a proportional income tax and a reform in which married individuals file taxes separately (separate filing). Our findings indicate that tax reforms are accompanied by large increases in labour supply that differ across demographic groups, with the bulk of the increase coming from married females. Under a proportional income tax reform, married females account for more than 50% of the changes in hours across steady states, while under separate filing reform, married females account for all the change in hours.

Item Type:Article
Uncontrolled Keywords:Taxation; Two-earner households; Labour force participation; E62; H31; J12; J22
Subjects:H Social Sciences > HB Economic Theory
ID Code:19879
Deposited By:Remzi Kaygusuz
Deposited On:26 Oct 2012 15:28
Last Modified:26 Oct 2012 15:28

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