Research

Job Market Paper

Disentangling Gender Norms and Tax Incentives: Analyzing Joint Taxation among Same-Sex Couples

With: Leonie Koch & Carina Neisser

Joint taxation of couples is often criticized for introducing distortions in intra-household income allocation, particularly by creating disincentives for secondary earners. However, quantifying the impact of joint taxation on earnings has been challenging due to a lack of exogenous variation and the confounding influence of traditional gender norms. To address these challenges, we exploit the 2013 introduction of joint taxation for same-sex civil partnerships in Germany. Using newly linked administrative tax return data, we analyze the entire population of same-sex partners who file taxes jointly, providing both extensive descriptive evidence on their income characteristics and causal estimates of the policy’s effects via a difference-in-differences approach. Finally, we analyze their tax responsiveness and compare it to that of different-sex spouses. Same-sex couples exhibit relatively equal income allocation prior to the reform, but joint taxation increases within-couple income inequality. Unlike different-sex couples, we observe the strongest specialization responses among same-sex couples with previously equal earnings, despite their lower incentives to specialize. We also find a lower probability of choosing tax withholding schemes that strengthen the disincentives on the secondary earner.

Working Papers

Relative Income Preferences Within the Household

Preferences over Relative Income within the Household

With: Johannes Hermle & Nikolaus Hildebrand

R&R: Journal of Political Economy

IZA DP No. 16803

What preferences do partners hold over their relative income within the household? We provide a flexible framework of preferences over relative income within the household and study their role for marital selection, separation, and household public good provision in a marriage market matching model with search frictions. We test the model predictions using large administrative tax data from Germany. We document the existence of a kink point in the relative income distribution at the point of spousal income equality. We also find the presence of a convex kink in wives’ household public good provision, suggesting that women bear the incidence of spousal relative income preferences. To disentangle the preferences of women and men, we implement a survey experiment. Our results indicate that women exhibit inequality aversion while men exhibit a preference for being the primary earner.

The Marriage Earnings Gap

With: Luisa Wallossek

What happens to earnings upon marriage? Linking administrative and survey data from Germany, we show that there is a marriage earnings gap. Even after accounting for the child penalty, women’s earnings drop by 20% after marriage. We show that the marriage earnings gap results from both the extensive margin (women stop working) and the intensive margin (women work fewer hours), but not from a decrease in hourly wages. Labor supply disincentives from joint taxation can explain about one quarter of the marriage earnings gap, while we find no effect for labor supply incentives from changes in divorce law. In addition to tax incentives, we show that gender norms are an important mechanism behind the marriage earnings gap.

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