Female market work, tax regimes, and the rise of the service sector
This paper studies the effects of tax structures (levels, progressivity, dual earning households) on female employment and, consequently, the rising service sector. US regional variation shows that the size of the service economy and female employment are positively correlated, and partially determined by different tax regimes. The paper uses a multi-sector model to: (1) quantify the effect of different tax regimes in incentivizing woman to enter the labor force, and (2) estimate the feedback effect from women entering the labor force on the service sector size. Counterfactual results suggest that: (1) European-style taxes decrease female employment growth by 48 percent and the rise of the service sector by 13 percent, with tax progressivity having a stronger effect than levels; and (2) working women and changing family structures account for 22 percent of the relative rise in US service employment; European taxes depress relative service hours an additional 11 percent.
|Date of creation:||Dec 2015|
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