This paper uses the exogenous variation caused by the Dutch tax reform of 2001 to investigate how married women react to financial incentives.<font face="CMR10" size="3"><font face="CMR10" size="3">Among OECD countries, the Netherlands has average female labor force participation, but by far the highest rate of part-time work. Our main conclusion is...</font></font>

European governments aim to raise labour supply, cut unemployment and, at the same time, maintain social cohesion. Yet, economists have stressed the trade-off between these objectives. This paper reviews the key policy insights from optimal tax theory to identify options for reform in the...