Working Paper: NBER ID: w13638
Authors: Alberto Alesina; Andrea Ichino; Loukas Karabarbounis
Abstract: Gender-Based Taxation (GBT) satisfies Ramsey's rule of optimality because it taxes at a lower rate the more elastic labor supply of women. This holds when different elasticities between men and women are taken as exogenous. We study GBT in a model in which labor supply elasticities emerge endogenously from the bargained allocation of goods and time in the family. We explore the cases of superior bargaining power for men, higher men wages and higher women productivity in home duties. In all cases, men commit to a career in the market and take less home duties than women. As a result, their market work becomes less substitutable to home duty and their labor supply responds less to changes in the market wage. When society can resolve its distributional concerns efficiently with gender-specific lump sum transfers, GBT with higher marginal tax rates on (single and married) men is optimal. In addition, GBT affects the intrafamily bargaining, leading to a more balanced allocation of labor market outcomes across spouses and a smaller gender gap in labor supply elasticities.
Keywords: gender-based taxation; labor supply; family chores; optimal taxation; intrahousehold bargaining
JEL Codes: D13; H21; J16; J20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| gender-based taxation (GBT) (H29) | increased welfare (I38) |
| gender-based taxation (GBT) (H29) | reduced distortion in labor market participation (J79) |
| gender-based taxation (GBT) (H29) | men commit more to market careers (J29) |
| men commit more to market careers (J29) | diminished labor supply responsiveness to wage changes (J29) |
| gender-based taxation (GBT) (H29) | more equitable distribution of household chores and labor market participation (D13) |
| gender-based taxation (GBT) (H29) | closure of gender elasticity gap (J16) |
| gender-based taxation (GBT) (H29) | convergence in labor supply elasticities (J20) |