European Tax Systems and their Impact on Family Employment Patterns

Drawing on neo-classical assumptions many studies generally assume negative effects of female labour supply with systems of married couples' joint taxation. By comparing the structure of rewards or concessions contained in the various tax systems for particular family employment patterns with the frequency distributions of the various family patterns of labour force participation that can be observed in ten different European countries, however, a clear ‘shaping effect’ of tax systems can not be found. This leads to the conclusion that the systems of family taxation alone can not explain emerging family patterns of labour force participation. Only if various social policies, such as the design of the tax system and labour market regulation, family policy, and – most important – childcare supply are coordinated to support a certain model of families' labour force participation that is in line with the preferences of families can a shaping effect be found.