Labour Supply and Taxes: New Estimates of the Responses of Wives to Husbands’ Wages
In this paper, we estimate income- and substitution- labour supply and participation elasticities for Canadian married women using data from the Survey of Labour and Income Dynamics 1996-2005. We use the Canadian Tax and Credit Simulator (CTaCS) and detailed information on the structure of income at the household level to compute the marginal tax rates faced by each individual. We then use these marginal tax rates to compute net own-wage, spouse-wage, and non-labour income. We show how the magnitude of the estimated elasticities varies depending on whether net or gross wages and income are used in the estimation procedure, and quantify biases caused by using average instead of marginal tax rates. Finally, because marginal tax rates vary significantly over the sample, we use quantile regressions to compare elasticities at different points of the hours distribution. Overall, our results show that public policies now have, on average, less scope for influencing hours of work than 10 years ago. However, the quantile results show that wives working fewer hours per week are more sensitive to changes in their own or spouses’ wages.
|Date of creation:||Feb 2012|
|Contact details of provider:|| Postal: Institut d'économie appliquée HEC Montréal 3000, Chemin de la Côte-Sainte-Catherine Montréal, Québec H3T 2A7|
Phone: (514) 340-6463
Fax: (514) 340-6469
Web page: http://www.hec.ca/iea/
More information through EDIRC
|Order Information:|| Postal: Institut d'économie appliquée HEC Montréal 3000, Chemin de la Côte-Sainte-Catherine Montréal, Québec H3T 2A7|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bradley T. Heim, 2007. "The Incredible Shrinking Elasticities: Married Female Labor Supply, 1978–2002," Journal of Human Resources, University of Wisconsin Press, vol. 42(4).
- Osberg, Lars & Phipps, Shelley, 1993. "Labour Supply with Quantity Constraints: Estimates from a Large Sample of Canadian Workers," Oxford Economic Papers, Oxford University Press, vol. 45(2), pages 269-291, April.
- Nakamura, Masao & Nakamura, Alice & Cullen, Dallas, 1979. "Job Opportunities, the Offered Wage, and the Labor Supply of Married Women," American Economic Review, American Economic Association, vol. 69(5), pages 787-805, December.
- Devereux, Paul J., 2007.
"Improved Errors-in-Variables Estimators for Grouped Data,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 25, pages 278-287, July.
- Paul J. Devereux, 2006. "Improved errors-in-variables estimators for grouped data," Working Papers 200602, School of Economics, University College Dublin.
- Devereux, Paul J., 2007. "Improved Errors-in-Variables Estimators for Grouped Data," CEPR Discussion Papers 6167, C.E.P.R. Discussion Papers.
- Alice Nakamura & Masao Nakamura, 1983. "Part-Time and Full-Time Work Behaviour of Married Women: A Model with a Doubly Truncated Dependent Variable," Canadian Journal of Economics, Canadian Economics Association, vol. 16(2), pages 229-257, May.
- Paul J. Devereux, 2004. "Changes in Relative Wages and Family Labor Supply," Journal of Human Resources, University of Wisconsin Press, vol. 39(3).
- Shelley A. Phipps, 1991. "Behavioural Response to UI Reform in Constrained and Unconstrained Models of Labour Supply," Canadian Journal of Economics, Canadian Economics Association, vol. 24(1), pages 34-54, February.
- Phipps, S., 1988. "Behavioural Response To Ui Reform In Constrained And Unconstrained Models Of Labour Supply," Department of Economics at Dalhousie University working papers archive 88-01, Dalhousie, Department of Economics.
- Pierre Lefebvre & Philip Merrigan, 2008. "Child-Care Policy and the Labor Supply of Mothers with Young Children: A Natural Experiment from Canada," Journal of Labor Economics, University of Chicago Press, vol. 26(3), pages 519-548, 07.
- Angrist, Joshua D., 1991. "Grouped-data estimation and testing in simple labor-supply models," Journal of Econometrics, Elsevier, vol. 47(2-3), pages 243-266, February.
- Joshua D. Angrist, 1988. "Grouped Data Estimation and Testing in Simple Labor Supply Models," Working Papers 614, Princeton University, Department of Economics, Industrial Relations Section..
- Paul J. Devereux, 2007. "Small-sample bias in synthetic cohort models of labor supply," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(4), pages 839-848.
- Paul J. Devereux, 2006. "Small sample bias in synthetic cohort models of labor supply," Working Papers 200606, School of Economics, University College Dublin.
- J. Barry Smith & Morton Stelcner, 1988. "Labour Supply of Married Women in Canada, 1980," Canadian Journal of Economics, Canadian Economics Association, vol. 21(4), pages 857-870, November.
- Richard P. Chaykowski & Lisa M. Powell, 1999. "Women and the Labour Market: Recent Trends and Policy Issues," Canadian Public Policy, University of Toronto Press, vol. 25(s1), pages 2-25, November.
- Emmanuel Saez & Michael R. Veall, 2005. "The Evolution of High Incomes in Northern America: Lessons from Canadian Evidence," American Economic Review, American Economic Association, vol. 95(3), pages 831-849, June.
- Chris Robinson & Nigel Tomes, 1985. "More on the Labour Supply of Canadian Women," Canadian Journal of Economics, Canadian Economics Association, vol. 18(1), pages 156-163, February.
- Eduardo Pontual Ribeiro, 2001. "Asymmetric labor supply," Empirical Economics, Springer, vol. 26(1), pages 183-197.
- Nakamura, Alice & Nakamura, Masao, 1981. "A Comparison of the Labor Force Behavior of Married Women in the United States and Canada, with Special Attention to the Impact of Income Taxes," Econometrica, Econometric Society, vol. 49(2), pages 451-489, March.
- Charles Michalopoulos & Philip K. Robins, 2000. "Employment and child-care choices in Canada and the United States," Canadian Journal of Economics, Canadian Economics Association, vol. 33(2), pages 435-470, May.
- Nakamura, Alice & Nakamura, Masao, 1985. "Dynamic models of the labor force behavior of married women which can be estimated using limited amounts of past information," Journal of Econometrics, Elsevier, vol. 27(3), pages 273-298, March. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:iea:carech:1202. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Patricia Power)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.