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Tax Structure and Female Labour Market Participation: Evidence from Ireland

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Author Info
Tim Callan () (ESRI and IZA)
Arthur van Soest () (Tilburg University, RAND and IZA)
John R. Walsh () (ESRI)

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Abstract

How great an effect does the structure of income taxes have on women’s labour market participation? This issue is investigated using a discrete choice static labour supply model for married couples in Ireland. The model incorporates fixed costs of working and simultaneously explains participation decisions and preferred hours of work. Details of the tax system are fully incorporated, and key elements of the welfare system are also taken into account. The model is estimated using data from the 1994 wave of the Living in Ireland Survey. The results are used to analyse the labour supply effects of a move to greater independence in the tax treatment of couples. The influence of tax structure on participation is reconsidered in the light of trends in women’s participation in the labour market and two key changes in the structure of taxation: a shift from a joint or aggregated basis of assessment to an "incomesplitting" system in 1980 and a further substantial shift from income-splitting towards greater independence from 2000 onwards.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3090.

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Length: 33 pages
Date of creation: Oct 2007
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Handle: RePEc:iza:izadps:dp3090

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Related research
Keywords: labour supply discrete choice micro-simulation

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Find related papers by JEL classification:
H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

This paper has been announced in the following NEP Reports:

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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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    Other versions:
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    Other versions:
  5. Moffitt, Robert, 1986. "The Econometrics of Piecewise-Linear Budget Constraints: A Survey and Exposition of the Maximum Likelihood Method," Journal of Business & Economic Statistics, American Statistical Association, vol. 4(3), pages 317-28, July.
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  7. Hausman, Jerry A, 1985. "The Econometrics of Nonlinear Budget Sets," Econometrica, Econometric Society, vol. 53(6), pages 1255-82, November. [Downloadable!] (restricted)
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    Other versions:
  14. Euwals, Rob & van Soest, Arthur, 1999. "Desired and actual labour supply of unmarried men and women in the Netherlands," Labour Economics, Elsevier, vol. 6(1), pages 95-118, March. [Downloadable!] (restricted)
    Other versions:
  15. Moffitt, Robert, 1990. "The Econometrics of Kinked Budget Constraints," Journal of Economic Perspectives, American Economic Association, vol. 4(2), pages 119-39, Spring. [Downloadable!] (restricted)
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  20. Patricia Apps & Ray Rees, 2007. "The Taxation of Couples," IZA Discussion Papers 2910, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  21. Blundell, Richard, 2001. "Welfare Reform for Low Income Workers," Oxford Economic Papers, Oxford University Press, vol. 53(2), pages 189-214, April.
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