Drivers of Participation Elasticities Across Europe: Gender or Earner Role within the Household?

44 Pages Posted: 12 Mar 2018

See all articles by Charlotte Bartels

Charlotte Bartels

German Institute for Economic Research (DIW Berlin) - German Socio Economic Panel

Cortnie Shupe

German Institute for Economic Research (DIW Berlin)

Abstract

We compute participation tax rates across the EU and find that work disincentives inherent in tax-benefit systems largely depend on household composition and the individual's earner role within the household. We then estimate participation elasticities using an IV Group estimator that enables us to investigate the responsiveness of individuals to work incentives. We contribute to the literature on heterogeneous elasticities by providing estimates for different socioeconomic groups by country, gender and earner role within the household. Our results show an average elasticity of 0.08 for men and of 0.14 for women as well as a high degree of heterogeneity across countries. The commonly cited difference in elasticities between men and women stems predominantly from the earner role of the individual within the household and nearly disappears once we control for this factor.

Keywords: participation elasticities, labor supply, taxation, cross-country comparisons

JEL Classification: H24, H31, J22, J65

Suggested Citation

Bartels, Charlotte and Shupe, Cortnie, Drivers of Participation Elasticities Across Europe: Gender or Earner Role within the Household?. IZA Discussion Paper No. 11359, Available at SSRN: https://ssrn.com/abstract=3137489

Charlotte Bartels (Contact Author)

German Institute for Economic Research (DIW Berlin) - German Socio Economic Panel ( email )

DIW Berlin
Berlin, Berlin 14191
Germany

Cortnie Shupe

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

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