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Social Subsidies and Marketization – the Role of Gender and Skill

Author

Listed:
  • Robert Duval-Hernández
  • Lei Fang
  • L. Rachel Ngai

Abstract

This paper decomposes the differences in aggregate market hours between US and Europe across gender-skill groups and finds that low-skilled women are the biggest contributors to aggregate differences, with the exception of Nordic countries. We develop a model to account for the gender-skill differences in market hours across countries. Taxes, which reduce market hours in favor of leisure and home production, explain a substantial fraction of the differences in hours for Southern and Central European countries. Subsidized family care, which reduces home hours of women in favor of market hours, explains the different pattern of hours in Nordic countries. Low-skilled women are more responsive to policy because of their comparative advantage in producing home services and the corresponding market substitutes.

Suggested Citation

  • Robert Duval-Hernández & Lei Fang & L. Rachel Ngai, 2018. "Social Subsidies and Marketization – the Role of Gender and Skill," SOEPpapers on Multidisciplinary Panel Data Research 962, DIW Berlin, The German Socio-Economic Panel (SOEP).
  • Handle: RePEc:diw:diwsop:diw_sp962
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    References listed on IDEAS

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    1. repec:aea:aejmac:v:9:y:2017:i:3:p:116-46 is not listed on IDEAS
    2. Dürnecker, Georg & Herrendorf, Berthold, 2014. "On the Allocation of Time," Working Papers 14-09, University of Mannheim, Department of Economics.
    3. Alessio Moro & Solmaz Moslehi & Satoshi Tanaka, 2017. "Does Home Production Drive Structural Transformation?," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(3), pages 116-146, July.
    4. Chakraborty, Indraneel & Holter, Hans A. & Stepanchuk, Serhiy, 2015. "Marriage stability, taxation and aggregate labor supply in the U.S. vs. Europe," Journal of Monetary Economics, Elsevier, vol. 72(C), pages 1-20.
    5. Sarah Cattan, 2016. "Can universal preschool increase the labor supply of mothers?," IZA World of Labor, Institute for the Study of Labor (IZA), pages 312-312, November.
    6. Fang Lei & McDaniel Cara, 2017. "Home hours in the United States and Europe," The B.E. Journal of Macroeconomics, De Gruyter, vol. 17(1), pages 1-27, January.
    7. 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.
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    More about this item

    Keywords

    Cross-country Differences in Market Hours; Home Production; Subsidies on Family Care;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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