DP8735 Taxing Women: A Macroeconomic Analysis
|Author(s):||Nezih Guner, Remzi Kaygusuz, Gustavo Ventura|
|Publication Date:||January 2012|
|Keyword(s):||Labour Force Participation, Taxation, Two-earner Households|
|JEL(s):||E62, H31, J12, J22|
|Programme Areas:||International Macroeconomics, Public Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=8735|
Based on well-known evidence on labor supply elasticities, several authors have concluded that women should be taxed at lower rates than men. We evaluate the quantitative implications and merits of this proposition. Relative to the current system of taxation, setting a proportional tax rate on married females equal to 4% (8%) increases output and married female labor force participation by about 3.9% (3.4%) and 6.9% (4.0%), respectively. Gender-based taxes improve welfare and are preferred by a majority of households. Nevertheless, welfare gains are higher when the U.S. tax system is replaced by a proportional, gender-neutral income tax.