Gender Inequalities and Redistribution Within Couples. The Equalising Properties of Tax-Benefit Systems in Europe

Publication type

Conference Paper

Series

The Levy Economics Institute of Bard College Conference

Authors

Publication date

May 17, 2006

Abstract:

In spite of there being few elements of tax or cash benefit systems in developed countries that are any longer explicitly gender-biased in a discriminatory sense, it is well recognised that they have significant gender effects. Policies that compensate for time spent in childbearing or caring may at the same time place limits on womens' incentives to earn an independent income. Partly because of this, women on average earn less than men. To the extent that the combined effects of tax-benefit systems are progressive, they result in redistribution from men to women in aggregate. However, an aggregate perspective is insufficient for understanding how earning opportunities and public policies affect living arrangements at the family level in general and the circumstances of men and women in particular. Arguably, it is within the household that a gendered division of labour is most relevant.

The effects of public policies on inequality within households operate both through access to income (and hence consumption) and potential access to income (through work incentives). It is difficult to observe how family resources get allocated within families. We can, however, examine the within-household distribution of resources indirectly by analysing the incomes brought into the household and to what extent taxes and benefits mitigate (or indeed exacerbate) any within-household inequality of incomes between men and women. If they do indeed share their income resources, how much of the implied redistribution is accomplished through the tax-benefit system and how much (by implication) by intra-household transfers between men and women themselves? We explore these questions for couples in the member countries of the (pre-2004) European Union (EU) using EUROMOD, the EU-wide tax-benefit microsimulation model.

This comparative perspective allows us to explore the relative effects of different policy regimes, given the underlying characteristics of each national population, using a consistent approach and set of incidence assumptions across countries. The within-household equalising properties of the systems are compared for particular types of couple (such as those with similar or widely diverging levels of earnings; those with and without children; and younger and older couples) and are discussed in terms of the influence of different policy instruments.

Depending on how they are implemented, redistributive polices can alter work incentives and, hence, participation in the labour market. From a household perspective, an important question is how existing policies shape the economic returns of different activity patterns, notably the sharing of paid and unpaid work. Tax-benefit systems that reduce income inequalities within couples may, at the same time, have the effect of reducing the lower earner's incentive to earn an independent income. Whether this is the case, and the extent it is so across countries and by types of couple is explored in the second part of the paper using calculated marginal effective tax rates for working-age men and women. Results take into account the full range of relevant taxes and benefits. They show to what extent women in couples face lower incentives to work than their male partners and how these patterns are associated with the redistributive properties of tax-benefit systems in each country.

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