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The impacts of the 1988 tax reform on married women's labour supply in Canada

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  • Sung-Hee Jeon

Abstract

I investigate the impact of the Canadian Federal tax reform of 1988 on the labour supply of lower income married women. The Canadian federal tax reform of 1988 replaced the spousal exemption with a nonrefundable tax credit. This reduced the dependence of a low income married woman’s effective marginal tax rate on the effective marginal tax rate of her husband. Using difference-in-difference estimators, I compare the labour supply of women married to higher income husbands (the "treatment" group) and the labour supply of women married to lower income husbands (the "control" group). The treatment group experienced significantly larger reductions in their effective marginal tax rate than the control group. I find a significant increase in labour force participation for women married to higher income husbands. I also show that the tax reform significantly increased the total annual working ho

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Bibliographic Info

Paper provided by McMaster University in its series Department of Economics Working Papers with number 2004-19.

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Length: 33 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:mcm:deptwp:2004-19

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  1. James B. Davies & Junsen Zhang, 1996. "Measuring Marginal Income Tax Rates for Individuals in Canada: Averages and Distributions over Time," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 29(4), pages 959-75, November.
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  3. Bourguignon, F. & Chiappori, P-A., 1991. "Collective Models of Household Behaviour: An Introduction," DELTA Working Papers, DELTA (Ecole normale supérieure) 91-29, DELTA (Ecole normale supérieure).
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  6. Richard P. Chaykowski & Lisa M. Powell, 1999. "Women and the Labour Market: Recent Trends and Policy Issues," Canadian Public Policy, University of Toronto Press, University of Toronto Press, vol. 25(s1), pages 2-25, November.
  7. Triest, Robert K., 1998. "Econometric Issues in Estimating the Behavioral Response to Taxation: A Nontechnical Introduction," National Tax Journal, National Tax Association, vol. 51(n. 4), pages 761-72, December.
  8. Jerry A. Hausman & Paul Ruud, 1984. "Family Labor Supply With Taxes," NBER Working Papers 1271, National Bureau of Economic Research, Inc.
  9. Richard Blundell & Alan Duncan & Costas Meghir, 1998. "Estimating Labor Supply Responses Using Tax Reforms," Econometrica, Econometric Society, Econometric Society, vol. 66(4), pages 827-862, July.
  10. Gerald Auten & Robert Carroll, 1999. "The Effect Of Income Taxes On Household Income," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 681-693, November.
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  13. Gruber, Jon & Saez, Emmanuel, 2002. "The elasticity of taxable income: evidence and implications," Journal of Public Economics, Elsevier, Elsevier, vol. 84(1), pages 1-32, April.
  14. Angrist, Joshua D., 1991. "Grouped-data estimation and testing in simple labor-supply models," Journal of Econometrics, Elsevier, Elsevier, vol. 47(2-3), pages 243-266, February.
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Cited by:
  1. Evridiki Tsounta, 2006. "Why Are Women Working so Much More in Canada? An International Perspective," IMF Working Papers, International Monetary Fund 06/92, International Monetary Fund.

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