DP9115 Taxation and Labor Supply of Married Couples across Countries: A Macroeconomic Analysis

Author(s): Alexander Bick, Nicola Fuchs-Sch√ľndeln
Publication Date: September 2012
Keyword(s): Hours Worked, Taxation, Two-Earner Households
JEL(s): E60, H20, H31, J12, J22
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=9115

We document contemporaneous differences in the aggregate labor supply of married couples across 19 OECD countries. We quantify the contribution of international differences in non-linear labor income taxes and consumption taxes, as well as male and female wages, to the international differences in the data. Our model replicates the comparatively small differences of married men's hours worked very well. Moreover, taxes and wages account for a large part of the observed substantial differences in married women's labor supply between the US and Western, Eastern, and Northern Europe, but cannot explain the low labor supply of married women in Southern Europe.