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.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics Letters.
Volume (Year): 16 (2009)
Issue (Month): 9 ()
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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
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