Gelber, Alexander M. and Mitchell, Joshua W. (2009): Taxes and Time Allocation: Evidence from Single Women and Men.
This is the latest version of this item.
Download (807kB) | Preview
The classic model of Becker (1965) suggests that labor supply decisions should be analyzed within the broader context of time allocation and market good consumption choices, but most empirical work on policy has focused exclusively on measuring impacts on market work. This paper examines how income taxes affect time allocation during the entire day, and how these time allocation decisions interact with expenditure patterns. Using the Panel Study of Income Dynamics from 1975 to 2004, we analyze the response of single women's housework, labor supply, and other time to variation in tax and transfer schedules across income levels, number of children, states, and time. We find that when the economic reward to participating in the labor force increases, market work increases and housework decreases, with the decrease in housework accounting for approximately two-thirds of the increase in market work. Analysis of repeated cross-sections of time diary data from 1975 to 2004 shows that "home production" decreases substantially when market hours of work increase in response to policy changes. Data on expenditures from the Consumer Expenditure Survey from 1980 to 2003 show some evidence that expenditures on market goods likely to substitute for housework increase in response to a greater incentive to join the labor force. The baseline estimates imply that the elasticity of substitution between consumption of home and market goods is 2.61. The results are consistent with the Becker model. Meanwhile, single men show little response to changes in tax policy, and we are able to rule out an elasticity of substitution between home and market goods for this group of more than 1.52.
|Item Type:||MPRA Paper|
|Original Title:||Taxes and Time Allocation: Evidence from Single Women and Men|
|Keywords:||taxation; time allocation; labor supply; housework; home production; leisure|
|Subjects:||E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies
J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J22 - Time Allocation and Labor Supply
|Depositing User:||Alexander M. Gelber|
|Date Deposited:||08. Jan 2011 06:58|
|Last Modified:||22. Feb 2013 19:52|
Aguiar, Mark, and Erik Hurst. 2007a. “Measuring Trends in Leisure: The Allocation of Time over Five Decades.” Quarterly Journal of Economics, 122: 969-1006.
Aguiar, Mark, and Erik Hurst. 2007b. “Life-Cycle Prices and Production.” American Economic Review, 97: 1533-1559.
Alesina, Alberto, Edward Glaeser, and Bruce Sacerdote. 2006. “Work and Leisure in the U.S. and Europe: Why So Different?” in NBER Macroeconomics Annual 2005.
Alm, James, and Leslie A. Whittington. 1995. “Does the Income Tax Affect Marital Decisions?” National Tax Journal, 48: 565-572.
Becker, Gary. 1965. “A Theory of the Allocation of Time.” Economic Journal, 125: 493-517.
Becker, Gary, and Gilbert Ghez. 1975. The Allocation of Time and Goods Over the Life Cycle. Chicago, IL: NBER.
Benhabib, Jess, Richard Rogerson, and Randall Wright. 1991. “Homework in Macroeconomics: Household Production and Aggregate Fluctuations.” Journal of Political Economy, 99: 1166-1187.
Biddle, Jeff E., and Daniel Hamermesh. 1990. “Sleep and the Allocation of Time.” Journal of Political Economy, 98: 922-943.
Blank, Rebecca M. 2002. “Evaluating Welfare Reform in the United States.” Journal of Economic Literature, 50: 1105-1166.
Blau, Francine D., and Lawrence M. Kahn. 2007. “Changes in the Labor Supply Behavior of Married Women: 1980-2000.” Journal of Labor Economics, 25: 393-438.
Blundell, Richard, and Thomas MaCurdy. 1999. “Labor Supply: A Review of Alternative Approaches.” Handbook of Labor Economics, 3: 1559-1695.
Burda, Michael, and Daniel Hamermesh. 2009. “Unemployment, Market Work, and Household Production.” NBER Working Paper No.14676.
Burda, Michael, Daniel Hamermesh and Philippe Weil. 2008. “The Distribution of Total Work in the EU and US.” In Working Hours and Job Sharing in the EU and USA: Are Americans Crazy? Are Europeans Lazy? eds. Tito Boeri, Michael Burda and Francis Kramarz. New York: Oxford University Press.
Charles, Kerwin, Erik Hurst, and Nikolai Roussanov. 2009. “Conspicuous Consumption and Race.” Quarterly Journal of Economics, 124: 425–467.
DeLeire, Thomas, and Helen Levy. 2005. “The Material Well-Being of Single Mother Households in the 1980s and 1990s: What Can We Learn from Food Spending?” National Poverty Center Working Paper No. 01-05.
Eissa, Nada, and Hilary Hoynes. 2004. “Taxes and the Labor Market Participation of Married Couples: the Earned Income Tax Credit.” Journal of Public Economics, 88: 1931-1958.
Eissa, Nada, and Hilary Hoynes. 2006. “Behavioral Responses to Taxes: Lessons from the EITC and Labor Supply.” Tax Policy and the Economy, 20: 73-110.
Eissa, Nada, Henrik Kleven, and Claus Kreiner. 2008. “Evaluation of Four Tax Reforms in the United States: Labor Supply and Welfare Effects for Single Mothers.” Journal of Public Economics, 92: 795-816.
Eissa, Nada, and Jeffrey B. Liebman. 1996. “Labor Supply Response to the Earned Income Tax Credit.” Quarterly Journal of Economics, 111: 605-637.
Feenberg, Daniel, and Elisabeth Coutts. 1993. “An Introduction to the TAXSIM Model.” Journal of Policy Analysis and Management, 12: 189-194.
Gelber, Alexander. 2009. “Taxation and Family Labor Supply.” NBER Working Paper.
Greenwood, Jeremy, Ananth Seshadri, and Mehmet Yorukoglu. 2005. “Engines of Liberation,” Review of Economic Studies, 72: 109-133.
Gronau, Reuben. 1977. “Leisure, Home Production, and Work — the Theory of the Allocation of Time Revisited.” Journal of Political Economy, 85: 1099-1123.
Gruber, Jonathan and Emmanuel Saez. 2002. “The Elasticity of Taxable Income: Evidence and Implications.” Journal of Public Economics, 84: 1-32.
Hamermesh, Daniel. 2008. “Direct Estimates of Household Production.” Economics Letters, 98: 31–34.
Hamermesh, Daniel, and G.A. Pfann. 2005. The Economics of Time Use. Amsterdam, Netherlands: Elsevier.
Hotz, V. Joseph, and John Karl Scholz. 2003. “The Earned Income Tax Credit.” In Means-Tested Transfer Programs in the United States, ed. Robert Moffitt. Chicago: University of Chicago Press and NBER.
Juster, Thomas, and Frank Stafford, eds. 1985. Time, Goods and Well-Being. Ann Arbor, MI: University of Michigan Press. Knowles, John. 2005. “Why are Married Men Working So Much?” University of Pennsylvania Working Paper.
Laitner, John, and Daniel Silverman. 2005. “Estimating Life-cycle Parameters from Consumption Behavior at Retirement.” NBER Working Paper 11163.
Meyer, Bruce. 2009. “The Effects of the EITC and Recent Reforms.” In Tax Policy and the Economy, Jeffrey Brown, ed. Boston, MA: M.I.T. Press.
Meyer, Bruce, and Dan Rosenbaum. 2001. “Welfare, the Earned Income Tax Credit, and the Labor Supply of Single Mothers.” Quarterly Journal of Economics, 116: 1063-1114.
Meyer, Bruce, and James X. Sullivan. 2008. “Changes in the Consumption, Income, and Well-Being of Single Mother Headed Families.” American Economic Review, 98: 221-241.
Meyer, Bruce, and James X. Sullivan. 2004. “The Effects of Welfare and Tax Reform: The Material Well-Being of Single Mothers in the 1980s and 1990s.” Journal of Public Economics, 88: 1387-1420.
Moffitt, Robert. 2003. “The Temporary Assistance for Needy Families Program.” In Means-Tested Transfer Programs in the United States, ed. Robert Moffitt. Chicago: University of Chicago Press and NBER.
Moffitt, Robert. 2006. “Welfare Work Requirements with Paternalistic Government Preferences.” Economic Journal, 116: 441-458.
Moffitt, Robert, and Mark O. Wilhelm. 2000. “Taxation and the Labor Supply Decision of the Affluent.” In Does Atlas Shrug? Economic Consequences of Taxing the Rich, ed. Joel Slemrod. Cambridge, MA: Russell Sage Foundation and Harvard University Press.
Prescott, Edward. 2004. “Why Do Americans Work So Much More than Europeans?” Federal Reserve Bank of Minneapolis Quarterly Review, 28: 2-13.
Ramey, Valerie. 2008. “How Much has Leisure Really Increased Since 1965?” UC San Diego Working Paper.
Rogerson, Richard, and Johanna Wallenius. 2009. “Micro and Macro Elasticities in a Life Cycle Model with Taxes.” Journal of Economic Theory, forthcoming.
Robinson, John, and Geoffrey Godbey. 1999. Time for Life. University Park, PA: Pennsylvania State University Press.
Rupert, Peter, Richard Rogerson, and Randall Wright. 1995. “Estimating Substitution Elasticities in Household Production Models.” Economic Theory, 6(1): 179–93.
Available Versions of this Item
Taxes and Time Allocation: Evidence from Single Women. (deposited 11. Dec 2009 09:28)
- Taxes and Time Allocation: Evidence from Single Women and Men. (deposited 08. Jan 2011 06:58) [Currently Displayed]