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Joint Taxation and the Labour Supply of Married Women: Evidence from the Canadian Tax Reform of 1988

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  • Thomas F. Crossley
  • Sung-Hee Jeon

Abstract

The Canadian federal tax reform of 1988 replaced a spousal tax exemption with a non-refundable tax credit. This reduced the "jointness" of the tax system: after the reform, secondary earners' effective "first dollar" marginal tax rates no longer depended on the marginal tax rates of their spouses. In practice, the effective "first dollar" marginal tax rates faced by women with high income husbands were particularly reduced. Using difference-in-difference estimators, we find a significant increase in labour force participation among women married to higher income husbands.

Suggested Citation

  • Thomas F. Crossley & Sung-Hee Jeon, 2006. "Joint Taxation and the Labour Supply of Married Women: Evidence from the Canadian Tax Reform of 1988," Quantitative Studies in Economics and Population Research Reports 404, McMaster University.
    • Handle: RePEc:mcm:qseprr:404
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    References listed on IDEAS

    as
    1. Richard Blundell & Alan Duncan & Costas Meghir, 1998. "Estimating Labor Supply Responses Using Tax Reforms," Econometrica, Econometric Society, vol. 66(4), pages 827-862, July.
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    More about this item

    Keywords

    Labour supply; Canadian tax reform; Married women; Difference-in-difference;
    All these keywords.

    JEL classification:

    • 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

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