Working Paper: CEPR ID: DP7337
Authors: Nicole Bosch; Bas van der Klaauw
Abstract: Among OECD countries, the Netherlands has average female labor force participation, but by far the highest rate of part-time work. This paper investigates the extent to which married women respond to financial incentives. We exploit the exogenous variation caused by a substantial Dutch tax reform in 2001. Our main conclusion is that the positive significant effect of tax reform on labor force participation dominates the negative insignificant effect on working hours. Our preferred explanation is that women respond more to changes in tax allowances than to changes in marginal tax rates.
Keywords: endogeneity; labor force participation; uncompensated wage elasticity; working hours
JEL Codes: H24; J22; J28
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| 2001 Dutch tax reform (H29) | female labor supply participation (J21) |
| 2001 Dutch tax reform (H29) | after-tax marginal hourly wage (J39) |
| after-tax marginal hourly wage (J39) | female labor supply participation (J21) |
| 2001 Dutch tax reform (H29) | working hours (J22) |
| after-tax marginal hourly wage (J39) | working hours (J22) |
| tax reform's shift from tax allowances to tax credits (H29) | female labor supply participation (J21) |
| education level (I24) | female labor supply participation (J21) |