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Female market work, tax regimes, and the rise of the service sector


Petersen Rendall, Michelle (2017). Female market work, tax regimes, and the rise of the service sector. Working paper series / Institute for Empirical Research in Economics No. 492, University of Zurich.

Abstract

US regional variation shows a positive correlation between the size of the service economy and female market hours, which is partially driven by different tax regimes. Based on this fact, this paper develops a multi-sector model to: (1) quantify the effect of different tax regimes in incentivizing woman to enter the labor force, and (2) estimate the feedback effect from women entering the labor force on the service sector size. Counterfactual results suggest that tax progressivity has a stronger effect than tax levels on married female market hours and the speed of structural transformation. In addition, married households react more to progressivity increases and single households are more sensitive to level changes. These results highlight that models ignoring tax structures (levels and progressivity) and household heterogeneity (dual versus single earning households) could lead to erroneous policy conclusions.

Abstract

US regional variation shows a positive correlation between the size of the service economy and female market hours, which is partially driven by different tax regimes. Based on this fact, this paper develops a multi-sector model to: (1) quantify the effect of different tax regimes in incentivizing woman to enter the labor force, and (2) estimate the feedback effect from women entering the labor force on the service sector size. Counterfactual results suggest that tax progressivity has a stronger effect than tax levels on married female market hours and the speed of structural transformation. In addition, married households react more to progressivity increases and single households are more sensitive to level changes. These results highlight that models ignoring tax structures (levels and progressivity) and household heterogeneity (dual versus single earning households) could lead to erroneous policy conclusions.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Institute for Empirical Research in Economics (former)
Dewey Decimal Classification:330 Economics
JEL Classification:E21, E24, J20, O14
Uncontrolled Keywords:Technological progress, sectoral labor allocation, female labor supply, labor demand, taxation, Technischer Fortschritt, Arbeitsangebot, Geschlechtsunterschied, Dienstleistungssektor, Haushalt, Steuerprogression, Steuerpolitik, USA
Scope:Discipline-based scholarship (basic research)
Language:English
Date:July 2017
Deposited On:29 Nov 2011 15:09
Last Modified:14 Mar 2024 15:38
Series Name:Working paper series / Institute for Empirical Research in Economics
Number of Pages:50
ISSN:1424-0459
Additional Information:Revised version ; Former titles: "Rise of the service sector and female market work: Europe vs US" and "The service sector and female market work"
OA Status:Green
Other Identification Number:merlin-id:5243
  • Content: Updated Version
  • Description: Revised version July 2017