Date of this Version
The Review of Economics and Statistics
I examine the response of husbands' and wives' earnings to a tax reform in which husbands' and wives' tax rates changed independently, allowing me to examine the effect of both spouses' incentives on each spouse's behavior. I analyze the large Swedish tax reform of 1990–1991 and find that in response to a compensated fall in one spouse's tax rate, each spouse's earnings rise. I compare these results to those of simplified econometric models used in the typical setting in which independent variation in each spouse's tax rate is unavailable. I find that standard econometric specifications may produce substantially biased estimates.
Gelber, A. M. (2014). Taxation and the Earnings of Husbands and Wives: Evidence From Sweden. The Review of Economics and Statistics, 96 (2), 287-305. http://dx.doi.org/10.1162/REST_a_00425
Date Posted: 27 November 2017
This document has been peer reviewed.