Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/34455 
Year of Publication: 
2007
Series/Report no.: 
IZA Discussion Papers No. 2845
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
Labor force participation rates of mothers in Austria and Germany are similar, however full-time employment rates are much higher among Austrian mothers. In order to find out to what extent these differences can be attributed to differences in the tax transfer-system, we perform a comparative micro simulation exercise. After estimating structural labor supply models of both countries, we interchange two important institutional characteristics of the two countries, namely (i) the definition of the tax unit within the personal income tax and (ii) the parental leave benefit scheme. As our analysis shows, differences in mothers' employment patterns can partly be explained by the different tax systems: While Germany has a system of joint taxation with income splitting for married couples, Austria taxes everyone individually, which leads to lower marginal tax rates for secondary earners than the German system.
Document Type: 
Working Paper

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