Data from the National Longitudinal Survey for 1970 are used to provide some
new empirical estimates of the effect of changes in the marginal rates of income and payroll taxation on the hours worked by two-earner families. A family labor supply madel incorporating tax and nontax parameters is estimated using
Aitken's generalized least squares estimator for seemingly unrelated equations.
The results of the study show that the tax structure is a significant factor in the
work decision of the two-earner family and that changes in the marginal rate of
tax can be expected to cause a realignment of work responsibilities within the
family.
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