Long-term Changes in Married Couples' Labor Supply and Taxes PDF Download
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Author: Alexander Bick
Publisher:
ISBN:
Category : Hours of labor
Languages : en
Pages : 35
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Book Description
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. We will 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.
Author: Alexander Bick
Publisher:
ISBN:
Category : Hours of labor
Languages : en
Pages : 35
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Book Description
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. We will 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.
Author: C. V. Brown
Publisher: Routledge
ISBN: 0429655851
Category : Business & Economics
Languages : en
Pages : 402
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Book Description
First published in 1981. This book reports on a decade of research into the effects of taxation on the supply of labour. In addition to their work in making labour supply estimates, the study explores a number of the ways labour supply estimates can be used. When budget constraints are non-linear it is not possible to estimate the effects of (tax) or other policy changes from knowledge of labour supply elasticities alone, and it is necessary to re-estimate the original model used to derive the estimates. The implications of labour supply estimates for the study of inequality and optimal taxation are considered. Macro-economic models of the economy typically omit labour supply functions or include functions which are inconsistent with micro-economic work on labour supply. This book will appeal to academic economists, senior students and policy-makers in the field of public finance and labour economics, who will find much of interest from both the theoretical and policy standpoints.
Author: Nada Eissa
Publisher:
ISBN:
Category : Labor supply
Languages : en
Pages : 68
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Book Description
This paper uses the Tax Reform Act of 1986 as a natural experiment to identify the labor supply responsiveness of married women to changes in the tax rate. The Tax Reform Act of 1986 reduced the top marginal tax rate by 44 percent (from 50 percent to 28 percent), but changed less the marginal tax rate for those further down the income distribution. I analyze the response of married women at or above the 99th percentile of the income distribution, using as a control group women from the 75th percentile of the income distribution. I therefore identify the tax effect as the difference between the change in labor supply of women with large tax rate reductions and the change in labor supply of women with small tax rate reductions. I find evidence that the labor supply of high-income, married women increased due to the Tax Reform Act of 1986. The increase in total labor supply of married women at the top of the income distribution (relative to married women at the 75th percentile of the income distribution) implies an elasticity with respect to the after- tax wage of approximately 0.8. At least half of this elasticity is due to labor force participation. Use of a second control group supports the participation response but is inconclusive on the hours of work response.
Author: Robert McClelland
Publisher:
ISBN: 9781457858178
Category :
Languages : en
Pages : 36
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Book Description
Labor supply elasticities are often used to evaluate the effect of changes in tax rates on the total hours worked in the economy. Historically, married women have tended to have larger labor supply elasticities than their spouses because they were the secondary earners in a couple. However, those elasticities have fallen sharply in recent decades -- a decline that has been attributed to greater labor force participation rates and increased career orientation among married women. Indeed, a growing share of wives earn more than their husbands, raising the question whether a person's sex or relative earnings is the relevant factor affecting the sensitivity of participation to wage and tax rates. This study examines whether women or lower-earning spouses have larger labor supply elasticities. Figures and tables. This is a print on demand report.
Author: Adam Looney
Publisher:
ISBN:
Category : Families
Languages : en
Pages : 64
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Book Description
We use anticipated changes in tax rates associated with changes in family composition to estimate intertemporal labor supply elasticities and elasticities of taxable income with respect to the net-of-tax wage rate. Changes in the ages of children can affect marginal tax rates through provisions of the tax code that are tied to child age and dependent status. We identify behavioral responses to these tax changes by comparing families who experienced a tax rate change to families who had a similar change in dependents but no resulting tax rate change. A primary advantage of our approach is that these changes can be anticipated, allowing us to estimate substitution effects that are not confounded by life-cycle income effects. We estimate an intertemporal elasticity of family labor earnings of 0.75 for families earning between $35,000 and $85,000 in the Survey of Income and Program Participation (SIPP) and find very similar estimates using the IRS-NBER individual tax panel.
Author: Hector Chade
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This article analyzes the effects of differential tax treatment of married and single individuals in the United States on marriage formation and composition, divorce, and labor supply. We develop a marriage-market model with search frictions and heterogeneous agents that is sufficiently rich to capture key elements of the problem under consideration. We then calibrate the model and use it to evaluate the quantitative effects of several tax reforms aimed at making the tax law neutral with respect to marital status. We find that these reforms (i) systematically increase the labor supply of married females, with changes ranging from 0.3 to 10.1 percent; (ii) have substantial effects on the correlation of spouses' incomes, which changes from 0.2 to values between 0.185 and 0.334; (iii) can lead to either an increase or decrease in the fraction of people married, with changes that range from 0.6 to 2.4 percent.
Author: Tim Callan
Publisher:
ISBN:
Category : Labor supply
Languages : en
Pages : 40
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Book Description
Author: Alexander Bick
Publisher:
ISBN:
Category : Married people
Languages : en
Pages : 42
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Book Description
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 nonlinearities 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.
Author: Jerry A. Hausman
Publisher:
ISBN:
Category : Husband and wife
Languages : en
Pages : 30
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Book Description
Over the period 1960 - 1983 the proportion of federal tax revenue raised by taxation of labor supply has risen from 57-77 percent. In this paper, we specify and estimate a model of family labor supply which treats both federal and state taxation. Husbands and wives labor supply are treated jointly rather than in aseparate manner as in previous research. A method to calculate the virtual wage for nonworking spouses is used within a utility maximizing framework to treat correctly the joint family labor supply decision. Joint family efforts are found to be important. The efficiency cost (deadweight loss) of labor taxation is estimated to be 29.6% of tax revenue raised. The effect of the new 10% deduction to ease the marriage tax for working spouses leads to a prediction of 3.8% increase in wives labor supply and a .9% decrease in husbands labor supply.Overall taxes paid are predicted to decrease by 3.4%.
Author: Agustin Velasquez
Publisher: International Monetary Fund
ISBN: 1498321143
Category : Business & Economics
Languages : en
Pages : 35
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Book Description
Hours worked vary widely across countries and over time. In this paper, we investigate the role played by taxation in explaining these differences for EU New Member States. By extending a standard growth model with novel data on consumption and labor taxes, we assess the evolution of trends in hours worked over the 1995-2017 period. We find that the inclusion of tax rates in the model significantly improves the tracking of hours. We also estimate the elasticity of hours (and its different margins) to quantify the deadweight loss introduced by consumption and labor taxes. We find that these taxes explain a large share of labor supply differences across EU New Member States and that the potential gains from policy actions are noteworthy.
