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Title: Taxation and Labor Force Participation: The Case of Italy

Citation Type: Conference Paper

Publication Year: 2011

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Abstract: Italy has the lowest labor force participation of women among OECD countries. Moreover, the labor force participation of Italian married women is positively correlated to their husbands' income. In this paper, we show that, despite an individual based tax system, the set of tax credits and cash transfers raises the tax burden levied on two-earner household, generating a disincentiveto participate in the labor force for married women, typically the second earner of the family. Using micro data from EU-SILC, we estimate a structural model where men's labor supply and incomes are given, and women sequentially decide whether to work and accept a given job o er. We then use the estimated parameters to measure the behavioral effects of alternative tax systems: the joint family taxation, the gender-based taxation (a la Alesina, Ichino, and Karabarbounis (2011)), the Working Tax Credit, and a mixture of the Italian and the joint taxation system.

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Authors: Marcassa, Stefania; Colonna, Fabrizio

Conference Name: Societa Italiana di Economia Pubblica

Publisher Location: Pavia, Italy

Data Collections: IPUMS USA

Topics: Family and Marriage, Gender, Labor Force and Occupational Structure, Other

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