Working Paper: CEPR ID: DP9115
Authors: Alexander Bick; Nicola Fuchs-Schündeln
Abstract: 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.
Keywords: hours worked; taxation; two-earner households
JEL Codes: E60; H20; H31; J12; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| nonlinear labor income taxes (H31) | hours worked (J22) |
| consumption taxes (H25) | hours worked (J22) |
| wages (J31) | hours worked (J22) |
| educational composition (I24) | hours worked (J22) |
| tax treatment of married couples (H24) | labor supply decisions of both spouses (J22) |
| differences in consumption taxes (H29) | hours worked for married women (D13) |
| nonlinearities of labor income tax codes (H31) | cross-country correlation between married men's and women's hours worked (D13) |