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Taxes and Time Allocation: Evidence from Single Women and Men

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  • Alexander M. Gelber
  • Joshua W. Mitchell

Abstract

The classic model of Becker (1965, "A Theory of the Allocation of Time", Economic Journal, 125, 493--517) suggests that labour supply decisions should be analysed within the broader context of time allocation and market good consumption choices, but most empirical work on policy has focused exclusively on measuring impacts on market work. This paper examines how income taxes affect time allocation during the entire day and how these time allocation decisions interact with expenditure patterns. Using the Panel Study of Income Dynamics from 1975 to 2004, we analyse the response of single women's housework, labour supply, and other time to variation in tax and transfer schedules across income levels, number of children, states, and time. We find that when the economic reward to participating in the labour force increases, market work increases and housework decreases, with the decrease in housework accounting for approximately two-thirds of the increase in market work. Analysis of repeated cross sections of time diary data from 1975 to 2004 shows that "home production" decreases substantially when market hours of work increase in response to policy changes. Data on expenditures show some evidence that expenditures on market goods likely to substitute for housework increase in response to a greater incentive to join the labour force. The baseline estimates imply that the elasticity of substitution between consumption of home and market goods is 2.61. The results are consistent with the Becker model. Meanwhile, single men show little response to changes in tax policy, and we are able to rule out an elasticity of substitution between home and market goods for this group of more than 1.66. Copyright , Oxford University Press.

Suggested Citation

  • Alexander M. Gelber & Joshua W. Mitchell, 2012. "Taxes and Time Allocation: Evidence from Single Women and Men," Review of Economic Studies, Oxford University Press, vol. 79(3), pages 863-897.
  • Handle: RePEc:oup:restud:v:79:y:2012:i:3:p:863-897
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    File URL: http://hdl.handle.net/10.1093/restud/rdr041
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    Citations

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    Cited by:

    1. Benjamin Bridgman, 2016. "Engines of Leisure," BEA Working Papers 0137, Bureau of Economic Analysis.
    2. Alessandra Casarico & Alessandro Sommacal, 2018. "Taxation and parental time allocation under different assumptions on altruism," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(1), pages 140-165, February.
    3. Kory Kroft & Kucko Kavan & Etienne Lehmann & Johannes Schmieder, 2015. "Optimal Income Taxation with Unemployment and Wage Responses: A Sufficient Statistics Approach," Working Papers hal-01292126, HAL.
    4. Duval-Hernandez, Robert & Fang, Lei & Ngai, L. Rachel, 2017. "Taxes and Market Hours: The Role of Gender and Skill," FRB Atlanta Working Paper 2017-8, Federal Reserve Bank of Atlanta.
    5. L. Rachel Ngai & Barbara Petrongolo, 2017. "Gender Gaps and the Rise of the Service Economy," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(4), pages 1-44, October.
    6. Tamar Khitarishvili & Kijong Kim, 2015. "The great recession and unpaid work time in the United States - Does poverty matter?," electronic International Journal of Time Use Research, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)) and The International Association for Time Use Research (IATUR), vol. 12(1), pages 19-48, December.
    7. Short, Gianna & Peterson, Hikaru, . "Does time spent preparing food affect consumers’ food choices?," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 236153, Agricultural and Applied Economics Association.
    8. Kabátek, Jan, 2015. "Essays on public policy and household decision making," Other publications TiSEM 8cdb178e-ad98-42e5-a7e1-b, Tilburg University, School of Economics and Management.
    9. Blomquist, Sören & Simula, Laurent, 2010. "Marginal Deadweight Loss when the Income Tax is Nonlinear," Working Paper Series 2010:3, Uppsala University, Department of Economics.
    10. Kabátek, Jan & van Soest, Arthur & Stancanelli, Elena, 2014. "Income taxation, labour supply and housework: A discrete choice model for French couples," Labour Economics, Elsevier, vol. 27(C), pages 30-43.
    11. Buhlmann, Florian & Elsner, Benjamin & Peichl, Andreas, 2017. "Tax Refunds and Income Manipulation Evidence from the EITC," IZA Discussion Papers 11033, Institute for the Study of Labor (IZA).
    12. Leslie S. Stratton, 2015. "The determinants of housework time," IZA World of Labor, Institute for the Study of Labor (IZA), pages 133-133, March.
    13. repec:eee:macchp:v2-203 is not listed on IDEAS
    14. Robert Duval-Hernandez & Lei Fang & L. Rachel Ngai, 2018. "Social Subsidies and Marketization: the role of gender and skill," Discussion Papers 1804, Centre for Macroeconomics (CFM).
    15. George Davis, 2014. "Food at home production and consumption: implications for nutrition quality and policy," Review of Economics of the Household, Springer, vol. 12(3), pages 565-588, September.
    16. Short, Gianna & Peterson, Hikaru, 2016. "Does time spent preparing food affect consumers’ food choices?," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 244990, Agricultural and Applied Economics Association.
    17. repec:bla:manchs:v:85:y:2017:i:6:p:744-764 is not listed on IDEAS
    18. repec:red:issued:15-177 is not listed on IDEAS

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