Texas A&m

Publications (1)0 Total impact

• Source

  Available from: nber.org

  Article: Taxation and Family Labor Supply

  Alexander M Gelber, Daniel Benjamin, Sören Blomquist, Gary Chamberlain, Hanley Chiang, Edward Glaeser, Guido Imbens, Ethan Kaplan, Je¤rey Liebman, Erzo Luttmer, [......], Dina Pomeranz, Håkan Selin, Seminar Participants At Harvard, Texas A&m, Uppsala Especially, Lawrence Katz, David Cutler, Martin Feldstein, Caroline Hoxby, Claudia Goldin
  [show abstract] [hide abstract]
  ABSTRACT: I examine the impact of taxation on family labor supply and test economic models of the family by analyzing responses to the Tax Reform of 1991 in Sweden, known as the "tax reform of the century" because of its large magnitude. Using detailed administrative panel data on approximately 11% of the married Swedish population, I …nd that husbands and wives react substantially to their own marginal tax rates and to their spouses'rates. The estimates imply that husbands'leisure and wives'leisure are complements in the full sample. I test and reject a set of models in which the family maximizes a single utility function. The standard econometric labor supply speci…cation, in which one spouse reacts to the other spouse's income as if it were unearned income, yields biased coe¢ cient estimates. Uncompensated labor supply elasticities are over-estimated by a factor of more than three, and income e¤ects are of the wrong sign. Overall, the results suggest that there is interplay between spouses' labor supply decisions, and that taking account of this joint aspect of their decision-making leads to new conclusions about labor supply responses to taxation.
  04/2008;