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Income taxation of couples, spouses' labor supplies and the gender wage gap

Author

Listed:
  • Helmuth Cremer

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Kerstin Roeder

    (UNIA - Universität Augsburg [Deutschland] = University of Augsburg [Germany] = Université d'Augsburg [Allemagne])

Abstract

We study the taxation of couples when female wages do not re?ect their true productivity. We show that the expression for the marginal tax rates of the male spouses is the same as in a Mirrleesian world where wages re?ect true productivities. Marginal taxes for the female spouses are reduced because of a Pigouvian correction. Consequently, the wage discrimination pleads for a lower marginal tax on the female spouse. Furthermore, the distortion of a couples?tradeo¤ between male and female labor supply is the same as in a Mirrleesian world without a gender wage gap. It only depends on true productivities and not on wages. In other words, the tax system completely neutralizes the extra distortion introduced by the wedge between the female spouse?s wage and her true productivity.

Suggested Citation

  • Helmuth Cremer & Kerstin Roeder, 2019. "Income taxation of couples, spouses' labor supplies and the gender wage gap," Post-Print hal-05105328, HAL.
    • Handle: RePEc:hal:journl:hal-05105328
    DOI: 10.1016/j.econlet.2018.12.015
    Note: View the original document on HAL open archive server: https://hal.science/hal-05105328v1
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