DP12292 Taxes and Market Hours -- the Role of Gender and Skill

Author(s): Robert Duval-Hernandez, Lei Fang, Liwa Rachel Ngai
Publication Date: September 2017
Keyword(s): Cross-country Differences in Market Hours, Home Production, Subsidies on Family Care
JEL(s): E24, E62, J22
Programme Areas: Labour Economics, Monetary Economics and Fluctuations, Macroeconomics and Growth
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12292

Cross-country differences of market hours in 17 OECD countries are mainly due to the hours of women, especially low-skilled women. This paper develops a model to account for the gender-skill differences in market hours across countries. The model explains a substantial fraction of the differences in hours by taxes, which reduce market hours in favor of leisure and home production, and by subsidized care, which frees (mostly) women from home care in favor of their market hours. Low-skilled women are more responsive to policy because of their low market returns and their comparative advantage in home activities.