Married Women's Labor Supply and the Marriage Penalty

Abstract

This article examines the effect of the marriage penalty on the hours worked by Abstract married women. Although the Tax Reform Act of 1986 eliminated the marriage penalty for some couples, many will still pay more taxes than they would if they were single. A positive wage elasticity implies that a married woman facing a marriage penalty will work fewer hours than she would if the marriage penalty did not exist. This article estimates that if the marriage penalty were eliminated, the average married woman would increase her hours worked by 46 hours per year. Married women from high-income families and married women who earn substantially less than do their husbands would show an even greater response to elimination of the marriage penalty because women from these groups are likely to face larger marriage penalties. Women who contribute 25% or less to family income would increase their labor supplies by 101 hours per year on average, and women whose family income is in the top income quartile would increase their labor supplies by an average of 99 hours per year.