Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/325093 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 18035
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper evaluates the redistributive and labour supply effects of transitioning from a joint to a fully individualised income tax system in Ireland. The current Irish tax system, which remains partially joint since the early 2000's, provides a financial advantage to married couples by allowing them to to share tax bands and credits. However, it also creates a financial disincentive for secondary earners (who are typically women) to work. Using the microsimulation model, SWITCH, we estimate the distributional effect of moving to a fully individualised tax system in Ireland. We find that this would result in income losses, which increase with the level of income. Linking SWITCH to a discrete choice labour supply model, we then estimate the behavioural response of married couples to a fully individualised tax regime. We find that a shift to individualised taxation would result in increased labour supply of married women, and a reduction in the hours worked by married men due to intra-household labour substitution effects. We explore the implications of this for a range of outcomes linked to womens' financial independence.
Subjects: 
labour supply
taxation of couples
tax-benefit system
JEL: 
E24
E32
J22
Document Type: 
Working Paper

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