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The impacts of the 1988 tax reform on married women's labour supply in Canada

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  • Sung-Hee Jeon

Abstract

I investigate the impact of the Canadian Federal tax reform of 1988 on the labour supply of lower income married women. The Canadian federal tax reform of 1988 replaced the spousal exemption with a nonrefundable tax credit. This reduced the dependence of a low income married woman’s effective marginal tax rate on the effective marginal tax rate of her husband. Using difference-in-difference estimators, I compare the labour supply of women married to higher income husbands (the "treatment" group) and the labour supply of women married to lower income husbands (the "control" group). The treatment group experienced significantly larger reductions in their effective marginal tax rate than the control group. I find a significant increase in labour force participation for women married to higher income husbands. I also show that the tax reform significantly increased the total annual working ho

Suggested Citation

  • Sung-Hee Jeon, 2004. "The impacts of the 1988 tax reform on married women's labour supply in Canada," Department of Economics Working Papers 2004-19, McMaster University.
  • Handle: RePEc:mcm:deptwp:2004-19
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    File URL: http://socserv.mcmaster.ca/econ/rsrch/papers/archive/2004-19.pdf
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    References listed on IDEAS

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    Cited by:

    1. Evridiki Tsounta, 2006. "Why Are Women Working So Much More in Canada? An International Perspective," IMF Working Papers 06/92, International Monetary Fund.

    More about this item

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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