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Analyzing Female Labor Supply: Evidence From A Dutch Tax Reform

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Executive Summary

Among OECD countries, the Netherlands has average female labor force participation, but by far the highest rate of part-time work. This paper investigates the extent to which married women respond to financial incentives. The authors exploit the exogenous variation caused by a substantial Dutch tax reform in 2001. Their main conclusion is that the positive significant effect of tax reform on labor force participation dominates the negative insignificant effect on working hours. Their preferred explanation is that women respond more to changes in tax allowances than to changes in marginal tax rates.

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