The impact of income taxation on the ratio between reservation and market wages and the incentives for labour supply
AbstractThis article extends previous research about the determinants of reservation wages by analysing the effect of progressive income taxation on the ratio between reservation and net market wages. Based on micro data for Germany Socio-Economic-Panel (SOEP) we show that joint income taxation in Germany which discriminates by marital status, has a strong and highly significant impact on the reservation/market wage ratio. Relative to single filers, this leads to strong negative labour supply incentives for secondary earners and to positive incentives for first earners in married couples.
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.
Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics Letters.
Volume (Year): 16 (2009)
Issue (Month): 9 ()
Contact details of provider:
Web page: http://www.tandfonline.com/RAEL20
Other versions of this item:
- Marco Caliendo & Ludovica Gambaro & Peter Haan, 2007. "The Impact of Income Taxation on the Ratio between Reservation and Market Wages and the Incentives for Labour Supply," Discussion Papers of DIW Berlin 670, DIW Berlin, German Institute for Economic Research.
- Caliendo, Marco & Gambaro, Ludovica & Haan, Peter, 2007. "The Impact of Income Taxation on the Ratio between Reservation and Market Wages and the Incentives for Labour Supply," IZA Discussion Papers 2599, Institute for the Study of Labor (IZA).
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Eckstein, Zvi & Mortensen, Dale T., 2006. "Labor search," European Economic Review, Elsevier, vol. 50(4), pages 807-810, May.
- Prasad, Eswar, 2003.
"What Determines the Reservation Wages of Unemployed Workers? New Evidence from German Micro Data,"
IZA Discussion Papers
694, Institute for the Study of Labor (IZA).
- Eswar Prasad, 2003. "What Determines the Reservation Wages of Unemployed Workers? New Evidence from German Micro Data," IMF Working Papers 03/4, International Monetary Fund.
- Eckstein, Zvi & van den Berg, Gerard J, 2004.
"Empirical Labour Search: A Survey,"
CEPR Discussion Papers
4199, C.E.P.R. Discussion Papers.
- Vincent Hogan, 2003.
"Wage Aspirations and Unemployment Persistence,"
200310, School Of Economics, University College Dublin.
- Viktor Steiner & Katharina Wrohlich, 2004. "Household Taxation, Income Splitting and Labor Supply Incentives: A Microsimulation Study for Germany," Discussion Papers of DIW Berlin 421, DIW Berlin, German Institute for Economic Research.
- Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-94, July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.