Pareto-Inefficiencies in Intrahousehold-Decision-Making: Empirical evidence from Germany
AbstractThe present paper offers empirical evidence for pareto-inefficiencies within German households. Using a large dataset from the German income tax statistic and conducting microsimulation analysis it refutes the assumption of pareto-efficiencies underlying the unitary as well as cooperative bargaining models of the household. The analysis is based on the unique features of the German source tax on wage income which give married couples some degree of freedom when determining their total tax liability and its distribution among spouses. We interpret distributive choices that do not minimize total tax withholding as the outcome of ineffiencient intra-family bargaining. Our result supports the findings of previous empirical work for developing countries and call for a reconsideration of the dominant models on intrahousehold-decision-making.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 13131.
Date of creation: 31 Jan 2009
Date of revision:
Household bargaining models; Withholding taxes; Empirics; Microsimulation;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- D10 - Microeconomics - - Household Behavior - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-02-07 (All new papers)
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