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The lock-in effect of marriage

Working Paper 2022-615

Abstract

In this paper, we use EUROMOD, the tax-benefit microsimulation model of the European Union,to investigate the impact of marriage-related tax-benefit instruments on the labour supply of married couples. For each married partner, we estimate their individual marginal effective tax rateand net replacement rate before and after marriage. We show that the marriage bonus, which iseconomically significant in eight European countries, decreases the work incentives for womenand, particularly, on the intensive margin. In contrast, the incentives on the intensive marginincrease for men once they are married, pointing to the marriage-biased and gender-biased taxbenefit structures in the analysed countries. Our results suggest that marriage bonuses contributeto a lock-in effect, where second earners, typically women, are incentivised to work less, withnegative economic consequences.

Authors: Michael Christl, Silvia De Poli, Viginta Ivaskaite-Tamosiune.

Keywords: marriage, cohabitation, marriage bonus, work incentives, gender, tax-benefit system, labour supply, Europe
JEL: H31, J12, J22