Taxing Women: A Macroeconomic Analysis
ICREA-MOVE; Autonomous University of Barcelona; Barcelona Graduate School of Economics (Barcelona GSE)
Arizona State University (ASU)
CEPR Discussion Paper No. DP8735
Based on well-known evidence on labor supply elasticities, several authors have concluded that women should be taxed at lower rates than men. We evaluate the quantitative implications and merits of this proposition. Relative to the current system of taxation, setting a proportional tax rate on married females equal to 4% (8%) increases output and married female labor force participation by about 3.9% (3.4%) and 6.9% (4.0%), respectively. Gender-based taxes improve welfare and are preferred by a majority of households. Nevertheless, welfare gains are higher when the U.S. tax system is replaced by a proportional, gender-neutral income tax.
Number of Pages in PDF File: 55
Keywords: Labour Force Participation, Taxation, Two-earner Households
JEL Classification: E62, H31, J12, J22
Date posted: January 20, 2012
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