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The Lock-in Effect of Marriage: Work Incentives after Saying “I Do”

Author

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  • Michael Christl

    (Fiscal Policy Analysis Unit, Joint Research Centre, European Commission, Edificio Expo, C. Inca Garcilaso, 3, 41092 Seville, Spain
    These authors contributed equally to this work.)

  • Silvia De Poli

    (Fiscal Policy Analysis Unit, Joint Research Centre, European Commission, Edificio Expo, C. Inca Garcilaso, 3, 41092 Seville, Spain
    These authors contributed equally to this work.)

  • Viginta Ivaškaitė-Tamošiūnė

    (Fiscal Policy Analysis Unit, Joint Research Centre, European Commission, Edificio Expo, C. Inca Garcilaso, 3, 41092 Seville, Spain
    These authors contributed equally to this work.)

Abstract

In this paper, we use EUROMOD, the tax-benefit microsimulation model of the European Union, to investigate the impact of marriage-related tax-benefit instruments on the financial incentives to work of married couples. For each spouse, we estimate their individual marginal effective tax rate and net replacement rate before and after marriage. We show that the marriage bonus, which is economically significant in eight European countries, decreases the work incentives for women, particularly on the intensive margin. In contrast, for men the incentives on the intensive margin increase once they are married, pointing to the marriage-biased and gender-biased tax-benefit structures in the analysed countries. Our results suggest that marriage bonuses contribute to a lock-in effect, where second earners, typically women, are incentivised to work less, with negative economic consequences.

Suggested Citation

  • Michael Christl & Silvia De Poli & Viginta Ivaškaitė-Tamošiūnė, 2022. "The Lock-in Effect of Marriage: Work Incentives after Saying “I Do”," Social Sciences, MDPI, vol. 11(11), pages 1-24, October.
    • Handle: RePEc:gam:jscscx:v:11:y:2022:i:11:p:493-:d:951512
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    References listed on IDEAS

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    1. Doorley, Karina, 2018. "Taxation, Work and Gender Equality in Ireland," IZA Discussion Papers 11495, Institute of Labor Economics (IZA).
    2. Thomas F. Crossley & Sung-Hee Jeon, 2007. "Joint Taxation and the Labour Supply of Married Women: Evidence from the Canadian Tax Reform of 1988," Fiscal Studies, Institute for Fiscal Studies, vol. 28(3), pages 343-365, September.
    3. Lixin Cai & Guyonne Kalb & Yi-Ping Tseng & Ha Vu, 2008. "The Effect of Financial Incentives on Labour Supply: Evidence for Lone Parents from Microsimulation and Quasi-Experimental Evaluation," Fiscal Studies, Institute for Fiscal Studies, vol. 29(2), pages 285-325, June.
    4. Maria Delgado Coelho & Aieshwarya Davis & Mr. Alexander D Klemm & Ms. Carolina Osorio-Buitron, 2022. "Gendered Taxes: The Interaction of Tax Policy with Gender Equality," IMF Working Papers 2022/026, International Monetary Fund.
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