Working Paper: CEPR ID: DP8735
Authors: Nezih Guner; Remzi Kaygusuz; Gustavo Ventura
Abstract: 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.
Keywords: labour force participation; taxation; two-earner households
JEL Codes: E62; H31; J12; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lower tax rates on married females (H31) | increase in married female labor force participation (J21) |
| lower tax rates on married females (H31) | increase in output (E23) |
| gender-based taxes (J16) | improve welfare (I30) |
| proportional gender-neutral income tax (H29) | higher welfare gains (D69) |
| gender-based taxes (J16) | lower welfare gains compared to gender-neutral tax (H31) |