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The lock-in effect of marriage: Work incentives after saying “Yes, I do.”

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Abstract

In this paper, we use EUROMOD, the tax-benefit microsimulation model of the European Union, to investigate the impact of marriage-related tax-benefit instruments on the labour supply of married couples. For each married partner, we estimate their individual marginal effective tax rate and net replacement rate before and after marriage. We show that the marriage bonus, which is economically significant in eight European countries, decreases the work incentives for women and, particularly, on the intensive margin. In contrast, the incentives on the intensive margin increase for men once they are married, pointing to the marriage-biased and gender-biased tax-benefit structures in the analysed countries. Our results suggest that marriage bonuses contribute to a lock-in effect, where second earners, typically women, are incentivised to work less, with negative economic consequences.

Suggested Citation

  • Michael Christl & Silvia De Poli & Viginta Ivaskaite-Tamosiune, 2022. "The lock-in effect of marriage: Work incentives after saying “Yes, I do.”," JRC Working Papers on Taxation & Structural Reforms 2022-07, Joint Research Centre.
    • Handle: RePEc:ipt:taxref:202207
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    File URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC130149
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    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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