| Abstract: |
We study the impact of income taxation on both partners‟ allocation of time
to market work and unpaid house work in households with two adults. We
estimate a structural household utility model in which the marginal utilities
of leisure and house work of both partners are modelled as random
coefficients, depending on observed and unobserved characteristics of the
household and the two partners. We use a discrete choice model with choice
sets of 2,401 points for each couple, distinguishing seven market work
intervals and seven house work intervals for each partner. The model is
estimated using data for France, which taxes incomes of married couples
jointly, like, for instance, Germany and the US. We find that both partners‟
market and non-market time allocation decisions are responsive to changes in
the tax system or other policy changes that change the financial incentives.
Women‟s time allocation is more responsive to the own and the partner‟s
wage rate than men‟s. Tax policy simulations suggest that moving from joint
taxation for married couples to separate taxation of each spouse would go a
small step in the direction of equalizing market and non-market work of
spouses. Selective taxation with smaller tax rates for women than for men
would magnify these effects. |