Working wives and higher taxes

Assistant Professor of Economics Alex Bick asked if tax differences explain differences in how much married men and women work. It turns out, yes.

Let’s start with the question that inspired Assistant Professor of Economics Alex Bick‘s research: Do Europeans work less than Americans? Yes, according to a study by ASU’s Ed Prescott that shows Europeans work less than Americans because higher taxes dull the incentive to work. Motivated by this finding, Bick wondered if tax differences also explain differences in how much married men and women work. According to his recent working paper that expands upon Prescott’s study, he and his co-author, Nicola Fuchs-Schündeln from Goethe University Frankfurt, compared the aggregate number of hours worked by married men and married women in the United States and Europe.

In a BizEd magazine article published on October 24, 2016:

However, they found that married women in Eastern Europe and Scandinavia work many more hours than married women in western and southern Europe — almost as many hours as married American women. They blame the differences in tax codes — in particular, the progressivity of the tax code, or how fast the tax rate increases with every additional dollar earned; and the way tax codes are applied to married couples. (They posit that the secondary earners in married couples are most often women.)