Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/243198 
Year of Publication: 
2021
Series/Report no.: 
DIW Discussion Papers No. 1969
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
We compute participation tax rates across the EU and find that work disincentives inherent in tax-benefit systems largely depend on household composition and the individual's earner role within the household. We then estimate participation elasticities using an IV group estimator that enables us to investigate the responsiveness of individuals to work incentives. We contribute to the literature on heterogeneous elasticities by providing estimates for breadwinners and secondary earners separately, according to their potential earnings rather than gender. Our results show an average participation elasticity of 0.0-0.1 among breadwinners and 0.1-0.4 among secondary earners in the EU as well as a high degree of heterogeneity across countries.
Subjects: 
participation elasticities
labor supply
taxation
cross-country comparisons
JEL: 
H24
H31
J22
J65
Document Type: 
Working Paper

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