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Analyzing female labor supply — Evidence from a Dutch tax reform

  • Bosch, Nicole
  • van der Klaauw, Bas

Among OECD countries, the Netherlands has an average female labor force participation, but by far the highest rate of part-time work. This paper investigates the extent to which married women respond to financial incentives. We exploit exogenous variation caused by a substantial Dutch tax reform in 2001. Our main conclusion is that the positive significant effect of the tax reform on labor force participation dominates the negative insignificant effect on working hours. The latter contradicts the common empirical finding of positive wage elasticities. Our preferred explanation is that women respond more to changes in tax allowances than to changes in marginal tax rates.

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Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 19 (2012)
Issue (Month): 3 ()
Pages: 271-280

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Handle: RePEc:eee:labeco:v:19:y:2012:i:3:p:271-280
Contact details of provider: Web page: http://www.elsevier.com/locate/labeco

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  1. Emmanuel Saez, 2002. "Optimal Income Transfer Programs: Intensive Versus Extensive Labor Supply Responses," The Quarterly Journal of Economics, MIT Press, vol. 117(3), pages 1039-1073, August.
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  10. Richard Blundell & Alan Duncan & Costas Meghir, 1995. "Estimating labour supply responses using tax reforms," IFS Working Papers W95/07, Institute for Fiscal Studies.
  11. Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-94, July.
  12. Aaberge, Rolf & Flood, Lennart, 2008. "Evaluation of an In-Work Tax Credit Reform in Sweden: Effects on Labor Supply and Welfare Participation of Single Mothers," IZA Discussion Papers 3736, Institute for the Study of Labor (IZA).
  13. Michiel Evers & Ruud Mooij & Daniel Vuuren, 2008. "The Wage Elasticity of Labour Supply: A Synthesis of Empirical Estimates," De Economist, Springer, vol. 156(1), pages 25-43, March.
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  17. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
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