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Tax reform, population ageing and the changing labour supply behaviour of married women

Abstract

The burden of financing retirement incomes in an ageing population is predicted to rise sharply in future decades. This paper investigates the effects of reforms to the Australian tax-benefit system involving a greater reliance on proportional taxation for raising revenue and a more targeted welfare system for cutting government expenditure, in order to reduce expected budget deficits. Estimates of changes in net incomes and hours of work suggest that reforms of this kind shift the tax burden to lower and middle income households with a second earner and that they can have counter-productive labour supply effects. The study explores the impact of projected increases in female work force participation and illustrates the importance of shifts in the labour supply of married women in predicting the fiscal effects of demographic change.

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I wish to thank the discussants of this paper, Sijbren Cnossen and Hiromitsu Ishi, for their detailed and constructive comments which have been most helpful in revising the paper. Thanks are also due to John Buchanan, Glenn Jones, John McCallum and Elizabeth Savage for their comments and suggestions.

This research has been supported by a grant from the Australian Research Council.

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Apps, P. Tax reform, population ageing and the changing labour supply behaviour of married women. J Popul Econ 4, 201–216 (1991). https://doi.org/10.1007/BF00602429

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Keywords

  • Labour Supply
  • Married Woman
  • Retirement Income
  • Supply Effect
  • Future Decade