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Taxes and Market Hours: The Role of Gender and Skill

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Abstract

Cross-country differences of market hours in 17 countries belonging to the Organisation for Economic Co-operation and Development are mainly due to the hours of women, especially low-skilled women. This paper develops a model to account for the gender-skill differences in market hours across countries. The model explains a substantial fraction of the differences in hours by taxes, which reduce market hours in favor of leisure and home production, and by subsidized care, which frees (mostly) women from home care in favor of their market hours. Low-skilled women are more responsive to policy because of their low market returns and their comparative advantage in home activities.

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  • 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.
  • Handle: RePEc:fip:fedawp:2017-08
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    1. repec:aea:aejmac:v:9:y:2017:i:3:p:116-46 is not listed on IDEAS
    2. Alexander Bick & Nicola Fuchs-Schündeln, 2018. "Taxation and Labour Supply of Married Couples across Countries: A Macroeconomic Analysis," Review of Economic Studies, Oxford University Press, vol. 85(3), pages 1543-1576.
    3. Claudia Olivetti & Barbara Petrongolo, 2008. "Unequal Pay or Unequal Employment? A Cross-Country Analysis of Gender Gaps," Journal of Labor Economics, University of Chicago Press, vol. 26(4), pages 621-654, October.
    4. Dürnecker, Georg & Herrendorf, Berthold, 2014. "On the Allocation of Time," Working Papers 14-09, University of Mannheim, Department of Economics.
    5. 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.
    6. Mark Aguiar & Erik Hurst & Loukas Karabarbounis, 2012. "Recent Developments in the Economics of Time Use," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 373-397, July.
    7. 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.
    8. Galor, Oded & Weil, David N, 1996. "The Gender Gap, Fertility, and Growth," American Economic Review, American Economic Association, vol. 86(3), pages 374-387, June.
    9. Georg Duernecker & Berthold Herrendorf, 2015. "On the Allocation of Time - A Quantitative Analysis of the U.S. and France," CESifo Working Paper Series 5475, CESifo Group Munich.
    10. 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.
    11. 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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