The Impact of Income Taxation on the Ratio between Reservation and Market Wages and the Incentives for Labour Supply
AbstractThis paper 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 (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 InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2599.
Length: 17 pages
Date of creation: Feb 2007
Date of revision:
Publication status: published in: Applied Economics Letters, 2009, 16 (9), 877-883
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Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
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Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Other versions of this item:
- Marco Caliendo & Ludovica Gambaro & Peter Haan, 2009. "The impact of income taxation on the ratio between reservation and market wages and the incentives for labour supply," Applied Economics Letters, Taylor and Francis Journals, vol. 16(9), pages 877-883.
- 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.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-02-24 (All new papers)
- NEP-PBE-2007-02-24 (Public Economics)
- NEP-PUB-2007-02-24 (Public Finance)
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.:
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