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Is the Household Demand for In-Home Services Sensitive to Tax Reductions? The French Case


  • Flipo, Anne

    () (CREST-INSEE)

  • Fougère, Denis

    () (Sciences Po, Paris)

  • Olier, Lucile

    () (CREST-INSEE)


Our paper examines the impact of tax reductions on the demand for services in the home. For that purpose, we estimate a structural model of demand for such services by using household individual data collected by INSEE (Paris) in 1996. In this model, the net hourly wage paid to the domestic employee, the household preferences for consumption of in-home services and the decision to take advantage of the tax reduction are considered as endogenous variables. Estimation of the econometric model uses the fact that some households are observed to consume domestic services and to take advantage of the tax reduction, while others either consume such services but do not take advantage of the tax reduction, or do not consume these services at all. Its identification relies on an exclusion restriction resulting from the tax credit schedule. Results show that the probability of consuming in-home services increases with age and income. A ten per cent increase in the tax reduction would increase from 45.9 to 50.8 per cent the proportion of households benefiting from the tax reduction among those who consume paid in-home services. Moreover, 13.5 per cent of households who do not actually consume such services would do so after the ten per cent increase in the tax reduction. These simulated variations would mainly concern high-income households.

Suggested Citation

  • Flipo, Anne & Fougère, Denis & Olier, Lucile, 2004. "Is the Household Demand for In-Home Services Sensitive to Tax Reductions? The French Case," IZA Discussion Papers 1392, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp1392

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    References listed on IDEAS

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    Cited by:

    1. Ali Fakih & Pascal L. Ghazalian, 2013. "Female Labour Force Participation in MENA's Manufacturing Sector: The Implications of Firm-related and National Factors," CIRANO Working Papers 2013s-46, CIRANO.
    2. Stancanelli, Elena G. F. & Stratton, Leslie S., 2010. "Her Time, His Time, or the Maid's Time: An Analysis of the Demand for Domestic Work," IZA Discussion Papers 5253, Institute for the Study of Labor (IZA).
    3. van Soest, A.H.O. & Stancanelli, E.G.F., 2010. "Does Income Taxation Affect Partners’ Household Chores?," Discussion Paper 2010-76, Tilburg University, Center for Economic Research.
    4. Fakih, Ali & Marrouch, Walid, 2012. "Determinants of Domestic Workers' Employment: Evidence from Lebanese Household Survey Data," IZA Discussion Papers 6822, Institute for the Study of Labor (IZA).
    5. Leslie S. Stratton, 2015. "The determinants of housework time," IZA World of Labor, Institute for the Study of Labor (IZA), pages 133-133, March.
    6. Ali Fakih & Walid Marrouch, 2014. "Who hires foreign domestic workers? evidence from Lebanon," Journal of Developing Areas, Tennessee State University, College of Business, vol. 48(3), pages 339-352, July-Sept.

    More about this item


    services in the home; tax reduction; household demand; labor cost;

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure

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