Long-Term Changes in Married Couples' Labor Supply and Taxes: Evidence from the US and Europe Since the 1980s

39 Pages Posted: 24 Sep 2018

See all articles by Alexander Bick

Alexander Bick

Arizona State University (ASU) - Economics Department

Bettina Brüggemann

McMaster University

Nicola Fuchs-Schundeln

Goethe University Frankfurt

Hannah Paule-Paludkiewicz

Goethe University Frankfurt

Multiple version iconThere are 4 versions of this paper

Date Written: September 2018

Abstract

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.

Keywords: hours worked, taxation, Two-Earner Households

JEL Classification: E24, H24, J22

Suggested Citation

Bick, Alexander and Brüggemann, Bettina and Fuchs-Schundeln, Nicola and Paule-Paludkiewicz, Hannah, Long-Term Changes in Married Couples' Labor Supply and Taxes: Evidence from the US and Europe Since the 1980s (September 2018). CEPR Discussion Paper No. DP13183. Available at SSRN: https://ssrn.com/abstract=3254218

Alexander Bick (Contact Author)

Arizona State University (ASU) - Economics Department ( email )

Tempe, AZ 85287-3806
United States

Bettina Brüggemann

McMaster University ( email )

Hamilton
Canada

Nicola Fuchs-Schundeln

Goethe University Frankfurt ( email )

Grueneburgplatz 1
Frankfurt am Main, 60323
Germany

Hannah Paule-Paludkiewicz

Goethe University Frankfurt

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

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