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Marriage-related taxes, social security benefits, and women’s labour supply in the us vox, cepr pol

Marriage-related taxes and Social Security benefits are holding back women’s labour supply in america

In america, both taxes and social security benefits depend on one’s marital status and have a tendency to discourage the labour way to obtain the secondary earner. Using information on US cohorts born in 1945 and 1955, this column implies that eliminating marriage-related provisions drastically escalates the participation of married women over their life time cycle and reduces the participation of married men after age 60. If the resulting government surplus were used to lessen income taxation, there will be large welfare gains for almost all the population.

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Fiscal policy responses to crises the social impacts

Counting the social impact

Lost in a lot of the discussion on fiscal-policy procyclicality has been the social impact of contractionary fiscal policy during recessions – things such as for example:

  • the poverty rate,
  • income inequality,
  • the unemployment rate, and
  • domestic conflict.

In a recently available research paper we look at the way the fiscal-policy responses to GDP crises have affected social indicators such as for example those in the above list (Vegh and Vuletin 2014). We find that contractionary fiscal policy during crises has tended to worsen social indicators both in Latin America and, recently, in the Eurozone, which calls into question recent claims on ‘expansionary fiscal austerity.’