Essays on income taxes and household production
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Couples make dynamic joint decisions, including how much each spouse works at home and in the market throughout life. By building a dynamic model of taxation, I quantify the welfare gains of moving to a gender-based tax. Further, I explore the implications of a gender-based income tax for labor market and time-use choices within a couple, taking into account changing labor market attachment through life. The key finding is that while gender-based taxation always improves household and social welfare, the model-specific household time allocations and government policy implications depend on underlying assumptions about gender differences. I model the inefficiency of income tax due to pooling old individuals and young individuals who differ in their skill distribution and use of time. Because age is correlated with ability and time investments in education, allowing tax rules to vary with age shrinks labor distortions. I use an overlapping generations model to study the effect of an age-based income tax on efficiency. I analytically show the efficiency gains and I numerically estimate a welfare gain equivalent to 5% of aggregate consumption when age-based taxes are implemented. Adult women generally, and married women in particular, spend more time than men doing housework and childcare activities. While gender differences in time-use patterns among adults at home are readily accepted and well documented, the onset and development of gender time-use differences over the adolescent years and into early adulthood are not well understood. In this research, I describe the development of time-use gender differences over the teenage years and into the early adult years using American Time Use Survey (ATUS) data, with a focus on activities relating to family duties and child care activities. I find gender divergence in home duties prior to the teenage years, which sharply stratifies upon high school graduation. Further, I find that time-use outcomes disproportionately impact women from disadvantaged socio-economic and family backgrounds.