Female Market Work, Tax Regimes, and the Rise of the Service Sector

University of Zurich, Institute for Empirical Research in Economics, Working Paper No. 492, Revised version

54 Pages Posted: 8 Jul 2010 Last revised: 14 Jul 2017

See all articles by Michelle Rendall

Michelle Rendall

University of Zurich - Department of Economics

Date Written: July 9, 2017

Abstract

US regional variation shows a positive correlation between the size of the service economy and female market hours, which is partially driven by different tax regimes. Based on this fact, this paper develops a multi-sector model to: (1) quantify the effect of different tax regimes in incentivizing woman to enter the labor force, and (2) estimate the feedback effect from women entering the labor force on the service sector size. Counterfactual results suggest that tax progressivity has a stronger effect than tax levels on married female market hours and the speed of structural transformation. In addition, married households react more to progressivity increases and single households are more sensitive to level changes. These results highlight that models ignoring tax structures (levels and progressivity) and household heterogeneity (dual versus single earning households) could lead to erroneous policy conclusions.

Keywords: Technological progress, sectoral labor allocation, female labor supply, labor demand, taxation

JEL Classification: E21, E24, J20, O14

Suggested Citation

Rendall, Michelle, Female Market Work, Tax Regimes, and the Rise of the Service Sector (July 9, 2017). University of Zurich, Institute for Empirical Research in Economics, Working Paper No. 492, Revised version. Available at SSRN: https://ssrn.com/abstract=1635785 or http://dx.doi.org/10.2139/ssrn.1635785

Michelle Rendall (Contact Author)

University of Zurich - Department of Economics ( email )

Zürich
Switzerland

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