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Will you civil union me? Taxation and civil unions in France

  • Leturcq, Marion

Although the tax system is not marriage neutral in many countries, it has been found to be only slightly significant in determining marriage decisions (Buffeteau and Echevin, 2003; Alm and Whittington, 1995). This paper tests whether the tax system can alter the decision to contract a civil union, which is less binding than a marital contract. In 1999, France introduced civil union (pacs) as an alternative legal union to marriage. I assess the impact of taxation on the decision to contract a pacs using a difference-in-differences evaluation of the 2005 income tax reform for newly pacsed couples. As the control group is contaminated by the reform, I propose an original estimation method based on a difference-in-differences-in-differences setting to estimate bounds to the impact of the reform. My results find a positive and increasing impact of taxation on pacs rates, but also a change in the timing of pacs unions suggesting that taxation alters the decision to contract a pacs. In addition, I find a slightly significant impact of taxation on the decision to terminate a pacs.

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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 96 (2012)
Issue (Month): 5 ()
Pages: 541-552

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Handle: RePEc:eee:pubeco:v:96:y:2012:i:5:p:541-552
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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