To Work or Not to Work: Did Tax Reforms Affect Labor Force Participation of Married Couples?
AbstractDuring the period 1960-2000, the proportion of two-earner couples among married couples in the U.S. more than doubled, while tax laws underwent numerous changes, with major reforms taking place in the 1980's (flattening of the federal income tax schedule) and in the 1990's (major expansion of the Earned Income Tax Credit (EITC)). We investigate the impact of the actual tax reforms on married couples' participation through a model of heterogeneous households. Theoretically, we elucidate what aspects of the tax reforms are important for a family time allocation choice when the work choice is discrete. Quantitatively, we show that even in the 1980's, changes in tax laws account for only 8% of the increase in the proportion of two-earner couples, although this small average impact masks a much larger impact experienced by women with high earning husbands. Another important finding is that the Earned Income Tax Credit substantially discourages work participation among married couples with low-earning husbands. A notable contribution of this work is the accurate incorporation of the complex U.S. tax code into a model of heterogeneous households, which is done using TAXSIM, a tax calculator software.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.
Volume (Year): 9 (2009)
Issue (Month): 1 (July)
Contact details of provider:
Web page: http://www.degruyter.com
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Fabrizio Colonna & Stefania Marcassa, 2013.
"Taxation and Labor Force Participation: The Case of Italy,"
- Colonna, Fabrizio & Marcassa, Stefania, 2012. "Taxation and Labor Force Participation: The Case of Italy," CEPREMAP Working Papers (Docweb) 1203, CEPREMAP.
- Stefania Marcassa & Fabrizio Colonna, 2011. "Taxation and Labor Force Participation: The Case of Italy," THEMA Working Papers 2011-22, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Bar, Michael & Leukhina, Oksana, 2005. "Accounting for Changes in Labor Force Participation of Married Women: The Case of the U.S. since 1959," MPRA Paper 17264, University Library of Munich, Germany, revised Jun 2009.
- Simona Cociuba & Alexander Ueberfeldt, 2012. "Heterogeneity and Long-Run Changes in U.S. Hours and the Labor Wedge," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20124, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
- Bar, Michael & Leukhina, Oksana, 2011. "On the time allocation of married couples since 1960," Journal of Macroeconomics, Elsevier, vol. 33(4), pages 491-510.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.