DP6591 | Gender Based Taxation and the Division of Family Chores

Publication Date

23/12/2007

JEL Code(s)

Keyword(s)

Programme Area(s)

Network(s)

Abstract

Gender Based Taxation (GBT) satisfies Ramsey?s optimal criterion by taxing less the more elastic labour supply of (married) women. This holds when different elasticities between men and women are taken as exogenous and primitive. But in this paper we also explore differences in gender elasticities which emerge endogenously in a model in which spouses bargain over the allocation of home duties. GBT changes spouses? implicit bargaining power and induces a more balanced allocation of house work and working opportunities between males and females. Because of decreasing returns to specialization in home and market work, social welfare improves by taxing conditional on gender. When income sharing within the family is substantial, both spouses may gain from GBT.