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Taxes, subsidies, and gender gaps in hours and wages

Duval-Hernández, Robert, Fang, Lei and Ngai, L. Rachel (2023) Taxes, subsidies, and gender gaps in hours and wages. Economica, 90 (358). 373 - 408. ISSN 0013-0427

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Identification Number: 10.1111/ecca.12466


Using microdata from 17 OECD countries, this paper documents a negative cross-country correlation between gender gaps in market hours and wages. We find that the cross-country differences in market hours are mostly accounted for by female market hours and the size of the sector that produces close substitutes to home production. We quantify the role played by taxes and family care subsidies on the two gender gaps in a multi-sector model with home production. Higher taxes and lower subsidies reduce the marketization of home production, leading to lower market hours. The effect is largely on women because both home production and the production of its market substitutes are female-intensive. The larger fall in female market hours reduces relative female labour supply, contributing to a higher female to male wage ratio.

Item Type: Article
Official URL:
Additional Information: © 2023 The Authors
Divisions: Economics
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
JEL classification: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy Formation, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E24 - Macroeconomics: Employment; Unemployment; Wages; Intergenerational Income Distribution (includes wage indexation)
J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J22 - Time Allocation and Labor Supply
Date Deposited: 30 Jan 2023 14:21
Last Modified: 15 Apr 2024 19:42

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