|Meier, Volker; Rainer, Helmut (2013): Beyond Ramsey: Gender-Based Taxation with Non-Cooperative Couples. Beiträge zur Jahrestagung des Vereins für Socialpolitik 2013: Wettbewerbspolitik und Regulierung in einer globalen Wirtschaftsordnung - Session: Public Economics: Theory F06-V1|
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This paper explores the implications of gender-based income taxation in a non-cooperative model of a couple’s time allocation between market work and providing a household public good. We find that the optimal structure of differential taxation by gender is solely determined by spouses’ relative marginal rates of substitution between the public household good and private consumption. Breaking down this general rule into the primitives of the model, the spouse with a lower personal valuation of the public household good should be taxed at a higher rate. If these valuations are identical, a comparative advantage in home production relative to market work will imply a higher marginal tax rate. Using a realistic calibration, we show that these two results may combine to imply a higher optimal tax rate on female labor supply. This result stands in sharp contrast to previous models of gender-based taxation in which households select Pareto efficient allocations. Extending the model to include altruistic preferences, leisure, or human capital accumulation reduces optimal tax rates, while sequential labor supply decisions affect the optimal tax rate of the primary earner in an ambiguous direction.
|Item Type:||Paper (Discussion Paper)|
|Published in:||Beiträge zur Jahrestagung des Vereins für Socialpolitik 2013: Wettbewerbspolitik und Regulierung in einer globalen Wirtschaftsordnung - Session: Public Economics: Theory F06-V1|
Economics > Chairs > Chair for Public Economics
Economics > Chairs > CESifo-Professorship for Social Policy and Labor Markets
|Subjects:||300 Social sciences > 330 Economics|
|Deposited On:||15. Apr 2014 08:48|
|Last Modified:||29. Apr 2016 09:16|
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Beyond Ramsey: Gender-based taxation with non-cooperative couples. (deposited 15. Apr 2014 08:48)
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