Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/130465
Authors: 
Apps, Patricia
Rees, Ray
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 5845
Abstract: 
This paper analyses optimal piecewise linear tax systems for two-earner households, based on joint and individual incomes respectively. It models the interaction between wage rates and variation in child care prices and productivities as determinants of across-household heterogene- ity in second earner labour supply. We find that individual taxation is welfare-superior to joint taxation in models that match the data on empirical wage distributions, on grounds of both efficiency and equity. The main reason for this is the inequity created by income splitting in the presence of a high degree of inequality in the primary earner wage distribution.
Subjects: 
optimal taxation
labour supply
child care
household production
inequality
JEL: 
J22
H21
H24
H31
D13
Document Type: 
Working Paper

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