Income splitting, specialization, and intra‐family distribution

Abstract

Income splitting for tax purposes results in more specialization of wives, but does this in turn generate more gender inequality? In my dynamic bargaining model with a divorce threatpoint, I find that who controls the couple's labour supply plays a crucial role in establishing this link. If spouses choose their labour supply non-cooperatively, only the husband's increase -but not her own decrease -in labour supply introduces a negative term in the wife's change in welfare. If the wife does not control her own labour supply, a decrease in her own labour supply introduces an additional negative term. JEL classification: H31, D13Fragmentation du revenu, spécialisation et répartition intra-familiale. La fragmentation du revenu aux fins d'impôt résulte en une plus grande spécialisation desépouses, mais est-ce que cela engendre davantage d'inégalité entre genres? Dans un modèle de marchandage dynamique avec menace de divorceà la clé, on découvre que la personne qui contrôle l'offre de travail du couple joue un rôle crucial dans la réponseà cette question.

Taxation and the Earnings of Husbands and Wives: Evidence from Sweden

“…Likewise, the literature on the optimal taxation of the family has typically Some recent literature has departed from the assumption of a unitary decision-maker in modeling optimal tax policy or the welfare consequences of tax reforms (e.g. Alesina, Ichino, and Karabarbounis 2011; Apps and Rees 1988;Apps and Rees 1999;Craig Brett 1998;Chiappori 1992;Olivier Donni 2003;Elisabeth Gugl 2009). My results are supportive of a key prediction of the Alesina, Ichino, and Karabarbounis (2011) model-that women's labor supply should be more elastic than men's-even in Sweden where gender di¤erences in labor market outcomes are arguably less dramatic than elsewhere.…”

Progressive taxes and firm births

“…64 This can, but need not, be rationalised in terms of a Nash bargaining analysis of household resource allocation. See, for example, Gugl (2009). It would result from just about any model in which the weight given to an (adult) individual's well-being in the household increases with their net-of-tax wage rate, as in the exchange model of Apps (1982) and the non-cooperative models of Lommerud (1995, 2000), or indeed earnings, as in the game-theoretic model of Basu (2006).…”

Gender-Based Taxation and the Division of Family Chores

“…See also Rees (1999a, 2007) for models with household production. Gugl (2009) analyzes the effects of income splitting on intrahousehold distribution.…”