DP281 | Income Taxes and Women's Economic Dependency: A Comparison of West Germany and Sweden


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Swedish wives' market earnings contribute 39% of the net family earnings of couples living together. German wives contribute 12%. This paper employs Swedish and German micro data on earnings and personal characteristics of couples. After tax earnings are simulated, under both the tax system of the home country and that of the other country. The direct effect of switching tax systems is to increase the share of German wives' market earnings to 17% and decrease that of Swedish wives to 33%. Analysis of variance of the female contribution to family income show that between 50 and 70% of the difference between Sweden and Germany is accounted for by the smaller labor supply of German women.