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Does Income Taxation Affect Partners' Household Chores?

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  • van Soest, Arthur

    ()
    (Tilburg University)

  • Stancanelli, Elena G. F.

    ()
    (CNRS, Sorbonne Economics Research Center (CES))

Abstract

We study the impact of income taxation on both partners' allocation of time to market work and unpaid house work in households with two adults. We estimate a structural household utility model in which the marginal utilities of leisure and house work of both partners are modelled as random coefficients, depending on observed and unobserved characteristics of the household and the two partners. We use a discrete choice model with choice sets of 2,401 points for each couple, distinguishing seven market work intervals and seven house work intervals for each partner. The model is estimated using data for France, which taxes incomes of married couples jointly, like, for instance, Germany and the US. We find that both partners’ market and non-market time allocation decisions are responsive to changes in the tax system or other policy changes that change the financial incentives. Women's time allocation is more responsive to the own and the partner’s wage rate than men's. Tax policy simulations suggest that moving from joint taxation for married couples to separate taxation of each spouse would go a small step in the direction of equalizing market and non-market work of spouses. Selective taxation with smaller tax rates for women than for men would magnify these effects.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5038.

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Length: 42 pages
Date of creation: Jun 2010
Date of revision:
Publication status: forthcoming in: Labour Economics
Handle: RePEc:iza:izadps:dp5038

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Keywords: labour supply; taxation; time use; discrete choice models;

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  1. Apps, Patricia, 1982. "Institutional inequality and tax incidence," Journal of Public Economics, Elsevier, vol. 18(2), pages 217-242, July.
  2. van Soest, Arthur & Das, Marcel & Gong, Xiaodong, 2002. "A structural labour supply model with flexible preferences," Journal of Econometrics, Elsevier, vol. 107(1-2), pages 345-374, March.
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Cited by:
  1. Knoef, M.G., 2011. "Essays on labor force participation, aging, income and health," Open Access publications from Tilburg University urn:nbn:nl:ui:12-4807622, Tilburg University.
  2. Elena Stancanelli, 2012. "Spouses' Retirement and Hours of Work Outcomes: Evidence from Twofold Regression Discontinuity," Documents de travail du Centre d'Economie de la Sorbonne 12074, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  3. Knoef, Marike & Kooreman, Peter, 2011. "The Effects of Cooperation: A Structural Model of Siblings' Caregiving Interactions," IZA Discussion Papers 5733, Institute for the Study of Labor (IZA).
  4. Apps, Patricia & Kabátek, Jan & Rees, Ray & van Soest, Arthur, 2012. "Labor Supply Heterogeneity and Demand for Child Care of Mothers with Young Children," IZA Discussion Papers 7007, Institute for the Study of Labor (IZA).
  5. Stancanelli, Elena G. F., 2012. "Spouses' Retirement and Hours Outcomes: Evidence from Twofold Regression Discontinuity with Differences-in-Differences," IZA Discussion Papers 6791, Institute for the Study of Labor (IZA).

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