[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ces/ifowps/_179.html
   My bibliography  Save this paper

Pigou Meets Ramsey: Gender-Based Taxation with Non-Cooperative Couples

Author

Listed:
  • Volker Meier
  • Helmut Rainer
Abstract
This paper explores the implications of gender-based income taxation in a noncooperative model of household behavior. In a first step, we show how gender-based taxes can act as Pigou taxes and correct the externality induced by a non-cooperative household equilibrium. We find that the first-best Pigou tax rules are solely determined by spouses’ relative marginal rates of substitution between the public household good and private consumption. Breaking down this eneral rule into the primitives of the model, the spouse with a comparative advantage in home production should be taxed at a higher rate. In a second step, we embed our non-cooperative framework in a standard second-best planning problem in which taxes serve a revenue-raising purpose. In this case, the optimal structure of differential taxation by gender is partly determined by a Ramsey-type inverse elasticity rule and partly by a Pigouvian tax element. We show that these two forces work in opposite directions in determining whether men or women should be taxed at a higher rate, and that either one could be dominant, depending on the revenue-raising position of the government. This result is robust to the introduction of two groups of households that differ in their mode of decision-making, which can be either cooperative or non-cooperative.

Suggested Citation

  • Volker Meier & Helmut Rainer, 2014. "Pigou Meets Ramsey: Gender-Based Taxation with Non-Cooperative Couples," ifo Working Paper Series 179, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:ifowps:_179
    as

    Download full text from publisher

    File URL: https://www.ifo.de/DocDL/IfoWorkingPaper-179.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Meier, Volker & Rainer, Helmut, 2012. "On the optimality of joint taxation for noncooperative couples," Labour Economics, Elsevier, vol. 19(4), pages 633-641.
    2. Del Boca, Daniela & Flinn, Christopher, 2012. "Endogenous household interaction," Journal of Econometrics, Elsevier, vol. 166(1), pages 49-65.
    3. Lundberg, Shelly & Pollak, Robert A, 1993. "Separate Spheres Bargaining and the Marriage Market," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 988-1010, December.
    4. Henrik Jacobsen Kleven & Claus Thustrup Kreiner & Emmanuel Saez, 2009. "The Optimal Income Taxation of Couples," Econometrica, Econometric Society, vol. 77(2), pages 537-560, March.
    5. Boskin, Michael J. & Sheshinski, Eytan, 1983. "Optimal tax treatment of the family: Married couples," Journal of Public Economics, Elsevier, vol. 20(3), pages 281-297, April.
    6. Craig Brett, 2007. "Optimal nonlinear taxes for families," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(3), pages 225-261, June.
    7. Doris Weichselbaumer & Rudolf Winter‐Ebmer, 2005. "A Meta‐Analysis of the International Gender Wage Gap," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 479-511, July.
    8. Elisabeth Gugl, 2009. "Income splitting, specialization, and intra‐family distribution," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(3), pages 1050-1071, August.
    9. Henrik Jacobsen Kleven & Claus Thustrup Kreiner, 2007. "Optimal Taxation of Married Couples with Household Production," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 63(4), pages 498-518, December.
    10. Apps,Patricia & Rees,Ray, 2009. "Public Economics and the Household," Cambridge Books, Cambridge University Press, number 9780521887878.
    11. Piggott, John & Whalley, John, 1996. "The Tax Unit and Household Production," Journal of Political Economy, University of Chicago Press, vol. 104(2), pages 398-418, April.
    12. Patricia F. Apps & Ray Rees, 1999. "Individual versus Joint Taxation in Models with Household Production," Journal of Political Economy, University of Chicago Press, vol. 107(2), pages 393-403, April.
    13. Alberto Alesina & Andrea Ichino & Loukas Karabarbounis, 2011. "Gender-Based Taxation and the Division of Family Chores," American Economic Journal: Economic Policy, American Economic Association, vol. 3(2), pages 1-40, May.
    14. Chen, Zhiqi & Woolley, Frances, 2001. "A Cournot-Nash Model of Family Decision Making," Economic Journal, Royal Economic Society, vol. 111(474), pages 722-748, October.
    15. Volker Meier & Matthias Wrede, 2013. "Reducing the excess burden of subsidizing the stork: joint taxation, individual taxation, and family tax splitting," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(3), pages 1195-1207, July.
    16. Zhiyang Jia, 2005. "Labor Supply of Retiring Couples and Heterogeneity in Household Decision-Making Structure," Review of Economics of the Household, Springer, vol. 3(2), pages 215-233, June.
    17. Dan Anderberg, 2007. "Inefficient households and the mix of government spending," Public Choice, Springer, vol. 131(1), pages 127-140, April.
    18. Patricia Apps & Ray Rees, 2011. "Optimal Taxation and Tax Reform for Two-Earner Households," CESifo Economic Studies, CESifo Group, vol. 57(2), pages 283-304, June.
    19. Volker Meier & Helmut Rainer, 2012. "Beyond Ramsey: Gender-Based Taxation with Non-Cooperative Couples," CESifo Working Paper Series 3966, CESifo.
    20. Apps, Patricia & Rees, Ray, 1999. "On the taxation of trade within and between households," Journal of Public Economics, Elsevier, vol. 73(2), pages 241-263, August.
    21. Patricia Apps & Ray Rees, 2011. "Relational Contracts, Taxation and the Household," CESifo Economic Studies, CESifo Group, vol. 57(2), pages 245-258, June.
    22. Patricia Apps & Ray Rees, 2004. "Fertility, Taxation and Family Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(4), pages 745-763, December.
    23. Cochard, François & Couprie, Hélène & Hopfensitz, Astrid, 2009. "Do Spouses Cooperate? And If Not: Why?," TSE Working Papers 09-134, Toulouse School of Economics (TSE).
    24. Meier, Volker & Rainer, Helmut, 2012. "On the optimality of joint taxation for noncooperative couples," Labour Economics, Elsevier, vol. 19(4), pages 633-641.
    25. repec:bla:scandj:v:97:y:1995:i:4:p:581-601 is not listed on IDEAS
    26. Michiel Evers & Ruud Mooij & Daniel Vuuren, 2008. "The Wage Elasticity of Labour Supply: A Synthesis of Empirical Estimates," De Economist, Springer, vol. 156(1), pages 25-43, March.
    27. Pollak, Robert A, 1985. "A Transaction Cost Approach to Families and Households," Journal of Economic Literature, American Economic Association, vol. 23(2), pages 581-608, June.
    28. Bergstrom, Theodore C, 1989. "A Fresh Look at the Rotten Kid Theorem--and Other Household Mysteries," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1138-1159, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Patricia Apps & Ray Rees, 2018. "Optimal family taxation and income inequality," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(5), pages 1093-1128, October.
    2. Barigozzi, Francesca & Cremer, Helmuth & Roeder, Kerstin, 2020. "Having it all, for all: Child-care subsidies and income distribution reconciled," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 188-211.
    3. Gerhard Glomm & Volker Meier, 2016. "Modes of Child Care," CESifo Working Paper Series 6287, CESifo.
    4. John Creedy & Norman Gemmell, 2020. "The elasticity of taxable income of individuals in couples," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(4), pages 931-950, August.
    5. Jochen Hundsdoerfer & Eva Matthaei, 2022. "Gender Discriminatory Taxes, Fairness Perception, and Labor Supply," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 78(1-2), pages 156-207.
    6. Takuya Obara & Yoshitomo Ogawa, 2024. "Optimal taxation in an endogenous fertility model with non-cooperative behavior," Review of Economics of the Household, Springer, vol. 22(1), pages 173-197, March.
    7. Anderberg, Dan & Rainer, Helmut & Roeder, Kerstin, 2018. "Family-specific investments and divorce with dynamically inconsistent households: Marital contracts and policy," Journal of Economic Behavior & Organization, Elsevier, vol. 148(C), pages 199-225.
    8. Gahramanov Emin & Gaibulloev Khusrav & Younas Javed, 2019. "Parental Transfers, Intra-household Bargaining and Fertility Decision," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(1), pages 1-17, January.
    9. Elisabeth Gugl & Linda Welling, 2017. "Efficiency of Family Bargaining Models with Renegotiation: The Role of Transferable Utility across Periods," Studies in Microeconomics, , vol. 5(1), pages 53-83, June.
    10. Mauricio Tejada & Claudia Piras & Luca Flabbi & Monserrat Bustelo, 2021. "Gender Gaps in Latin American Labor Markets: Implications from an Estimated Search Model," Annals of Economics and Statistics, GENES, issue 142, pages 111-178.
    11. Volker Meier & Matthew D. Rablen, 2024. "Political economy of redistribution between traditional and modern families," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(4), pages 980-1008, August.
    12. Sebastian Benz & Mario Larch & Markus Zimmer, 2014. "The structure of the German economy," Applied Economics, Taylor & Francis Journals, vol. 46(27), pages 3274-3283, September.
    13. Manuel Santos Silva & Stephan Klasen, 2021. "Gender inequality as a barrier to economic growth: a review of the theoretical literature," Review of Economics of the Household, Springer, vol. 19(3), pages 581-614, September.
    14. Hundsdoerfer, Jochen & Matthaei, Eva Kristina, 2020. "Gender discriminatory taxes, fairness perception, and labor supply," Discussion Papers 2020/6, Free University Berlin, School of Business & Economics.
    15. Takuya Obara & Yoshitomo Ogawa, 2020. "Optimal Taxation in an Endogenous Fertility Model with Non-Cooperative Couples," Discussion Paper Series 211, School of Economics, Kwansei Gakuin University, revised Jan 2021.
    16. Dan Anderberg & Helmut Rainer & Kerstin Roeder, 2016. "Family-Specific Investments and Divorce: A Theory of Dynamically Inconsistent Household Behavior," CESifo Working Paper Series 5996, CESifo.
    17. Gerhard Glomm & Volker Meier, 2020. "Efficient child care subsidies: any need for cash for care?," Review of Economics of the Household, Springer, vol. 18(3), pages 773-793, September.
    18. Komura, Mizuki & Ogawa, Hikaru & Ogawa, Yoshitomo, 2019. "Optimal income taxation when couples have endogenous bargaining power," Economic Modelling, Elsevier, vol. 83(C), pages 384-393.
    19. Bachmann, Ronald & Bechara, Peggy & Cim, Merve & Kramer, Anica, 2018. "Working women and labour market inequality. Research project for the Wilfried Martens Centre for European Studies: Final report - July 2018," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 195939.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Volker Meier & Helmut Rainer, 2012. "Beyond Ramsey: Gender-Based Taxation with Non-Cooperative Couples," CESifo Working Paper Series 3966, CESifo.
    2. Meier, Volker & Rainer, Helmut, 2012. "On the optimality of joint taxation for noncooperative couples," Labour Economics, Elsevier, vol. 19(4), pages 633-641.
    3. Takuya Obara & Yoshitomo Ogawa, 2020. "Optimal Taxation in an Endogenous Fertility Model with Non-Cooperative Couples," Discussion Paper Series 211, School of Economics, Kwansei Gakuin University, revised Jan 2021.
    4. Volker Meier & Matthias Wrede, 2013. "Reducing the excess burden of subsidizing the stork: joint taxation, individual taxation, and family tax splitting," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(3), pages 1195-1207, July.
    5. Hans Fehr & Manuel Kallweit & Fabian Kindermann, 2013. "Reforming Family Taxation in Germany - Labor Supply vs. Insurance Effects," CESifo Working Paper Series 4386, CESifo.
    6. Alberto Alesina & Andrea Ichino & Loukas Karabarbounis, 2011. "Gender-Based Taxation and the Division of Family Chores," American Economic Journal: Economic Policy, American Economic Association, vol. 3(2), pages 1-40, May.
    7. Patricia Apps & Ray Rees, 2018. "Optimal family taxation and income inequality," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(5), pages 1093-1128, October.
    8. Maria Coelho & Aieshwarya Davis & Alexander Klemm & Carolina Osorio-Buitron, 2024. "Gendered taxes: the interaction of tax policy with gender equality," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(5), pages 1413-1460, October.
    9. Cremer, Helmuth & Lozachmeur, Jean-Marie & Maldonado, Dario & Roeder, Kerstin, 2016. "Household bargaining and the design of couples’ income taxation," European Economic Review, Elsevier, vol. 89(C), pages 454-470.
    10. Patricia Apps & Ray Rees, 2011. "Relational Contracts, Taxation and the Household," CESifo Economic Studies, CESifo Group, vol. 57(2), pages 245-258, June.
    11. Mizuki Komura, 2013. "Tax reform and endogenous gender bargaining power," Review of Economics of the Household, Springer, vol. 11(2), pages 175-192, June.
    12. Apps, Patricia & Rees, Ray, 2012. "Optimal Taxation, Child Care and Models of the Household," IZA Discussion Papers 6823, Institute of Labor Economics (IZA).
    13. Immervoll, Herwig & Kleven, Henrik Jacobsen & Kreiner, Claus Thustrup & Verdelin, Nicolaj, 2011. "Optimal tax and transfer programs for couples with extensive labor supply responses," Journal of Public Economics, Elsevier, vol. 95(11), pages 1485-1500.
    14. Hermann Buslei & Katharina Wrohlich, 2014. "Besteuerung von Paaren: das Ehegattensplitting und seine Alternativen," DIW Roundup: Politik im Fokus 21, DIW Berlin, German Institute for Economic Research.
    15. Spencer Bastani, 2013. "Gender-based and couple-based taxation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(4), pages 653-686, August.
    16. Jacobs, Bas & Jongen, Egbert L.W. & Zoutman, Floris T., 2017. "Revealed social preferences of Dutch political parties," Journal of Public Economics, Elsevier, vol. 156(C), pages 81-100.
    17. Patricia Apps & Ray Rees, 2022. "Inequality measurement and tax/transfer policy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(4), pages 953-984, August.
    18. Patricia Apps & Ray Rees, 2010. "Australian Family Tax Reform and the Targeting Fallacy," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(2), pages 153-175, June.
    19. Richard Cornes & Jun-ichi Itaya & Aiko Tanaka, 2012. "Private provision of public goods between families," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(4), pages 1451-1480, October.
    20. Donni, Olivier & Molina, José Alberto, 2018. "Household Collective Models: Three Decades of Theoretical Contributions and Empirical Evidence," IZA Discussion Papers 11915, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ifowps:_179. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/ifooode.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.