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Taxation and the Wife's Use of Time

Taxation and the Wife's Use of Time This study examines the influence of taxation on the wife's choice between home and market production by treating the marginal tax rate as a decision variable. The data analyzed, from the Panel Study of Income Dynamics, provide information on the annual hours that husbands and wives devote to market work and housework, including child care, whereas previous studies have measured only changes in market hours and have assumed, in effect, that all other hours were devoted to nonproductive leisure. The empirical results indicate that wives working outside the home react to higher levels of taxation by reducing their market hours and increasing their home production time. In fact, the hypothesis cannot be rejected that wives completely reallocate time lost from the labor market to nonmarket production in an attempt to restore household real income. The authors conclude that the production loss from progressive taxation is usually overstated, though wives may lose through depreciation of their market skills and society loses to the extent that specialization in the economy declines. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png ILR Review SAGE

Taxation and the Wife's Use of Time

Hunt, Janet C.; DeLorme, Charles D.; Hill, R. Carter
ILR Review , Volume 34 (3): 7 – Apr 1, 1981
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References (1)

Publisher
SAGE
Copyright
© 1981 Cornell University
ISSN
0019-7939
eISSN
2162-271X
DOI
10.1177/001979398103400309
Publisher site
See Article on Publisher Site

Abstract

This study examines the influence of taxation on the wife's choice between home and market production by treating the marginal tax rate as a decision variable. The data analyzed, from the Panel Study of Income Dynamics, provide information on the annual hours that husbands and wives devote to market work and housework, including child care, whereas previous studies have measured only changes in market hours and have assumed, in effect, that all other hours were devoted to nonproductive leisure. The empirical results indicate that wives working outside the home react to higher levels of taxation by reducing their market hours and increasing their home production time. In fact, the hypothesis cannot be rejected that wives completely reallocate time lost from the labor market to nonmarket production in an attempt to restore household real income. The authors conclude that the production loss from progressive taxation is usually overstated, though wives may lose through depreciation of their market skills and society loses to the extent that specialization in the economy declines.

Journal

ILR Review – SAGE

Published: Apr 1, 1981

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