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EUROMOD Working Paper Series EM10/13

What’s best for women: gender based taxation, wage subsidies or basic income?

Authors

Publication date

01 May 2013

Abstract

Gender based taxation (GBT) has been recently proposed as a promising policy in order toimprove women’s status in the labour market and within the family. We use a microeconometricmodel of household labour supply in order to evaluate, with Italian data, the behavioural andwelfare effects of GBT as compared to other policies based on different optimal taxationprinciples. The comparison is interesting because GBT, although technically correct, might faceimplementation difficulties not shared by other policies that in turn might produce comparablebenefits. The simulation procedure accounts for the constraints implied by fiscal neutrality andmarket equilibrium. Our results support to some extent the expectations of GBT’s proponents.However it is not an unquestionable success. GBT induces a modest increase of women’semployment, but similar effects can be attained by universal subsidies on low wages. When thepolicies are evaluated in terms of welfare, GBT ranks first among single women but for the wholepopulation the best policies are subsidies on low wages, unconditional transfers or a combinationof the two.

Subjects

Income Dynamics, Wages And Earnings, and Taxation

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