Do Married Women Base Their Labour Supply Decisions on Gross or Marginal Wages?
AbstractIn the face of complex budget constraints the assumption of rationally acting individuals having complete knowledge of the tax system is a theoretical borderline. The specific issues examined in this study are (i) to what extent do consumers (here married women) perceive their true marginal tax rate when they make their labour supply decisions?, and (ii) how does the perception of the marginal tax rate differ among various socio-economic groups?. Using different approaches and different data sets·we consistently find that (i) against conventional wisdom the assumption of complete knowledge of the tax system does not fit the data well, and that (ii) education appears to be the main determinant of a correct perception of the marginal tax rate. --
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Bibliographic InfoPaper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 93-09.
Date of creation: 1993
Date of revision:
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