A collective model for female labour supply with non-participation and taxation

This paper presents a collective discrete-choice model for female labour supply. Preferences of females and the intra-household allocation process are both econometrically identified. The model incorporates non-participation and non-linear taxation. It is applied to Belgian micro-data and is used to evaluate two revenue-neutral versions of the 2001 Tax Reform Act. We find small positive behavioural responses to the reforms. The reforms are not unambiguously welfare-improving. Generally, the first revenue-neutral reform (the actual reform and a household lump-sum tax) is more beneficial to females in couples than the second (the actual reform and a proportional decrease of household disposable incomes).