Taxation and Labor Force Participation: The Case of Italy
Italy has the lowest labor force participation of women among OECD countries. Moreover, the participation rate of married women is positively correlated to their husbands' income. We show that a high tax schedule together with tax credits and transfers raise the burden of two-earner house- holds, generating disincentives to work. We estimate a structural labor supply model for women, and use the estimated parameters to simulate the eects of alternative revenue-neutral tax systems. We nd that joint taxation implies a drop in the participation rate. Conversely, working tax credit and gender-based taxation boost it, with the eects of the former concentrated on low educated women.
Year of publication: |
2011
|
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Authors: | Marcassa, Stefania ; Colonna, Fabrizio |
Institutions: | Théorie Économique, Modélisation, Application (THEMA), Université de Cergy-Pontoise |
Keywords: | female labor force participation, Italian tax system, second earner tax rate, joint taxa- tion, gender-based taxation, working tax credit JEL Classication: J21, J22, H31 |
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