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Dual income tax reform in Germany: A microsimulation approach

  1. Gerhard Wagenhals  Is a corresponding author
  1. Universität Hohenheim, Germany
Research article
Cite this article as: G. Wagenhals; 2011; Dual income tax reform in Germany: A microsimulation approach; International Journal of Microsimulation; 4(2); 3-13. doi: 10.34196/ijm.00049
1 figure and 6 tables

Figures

Marginal tax rates.

Source: Own calculations.

Tables

Table 1
Labor supply transition matrix for single men.
Post-reform hours
Pre-reform hours 0 10 20 30 40 50 % (row)
0 16.55 0.00 0.01 0.26 0.56 0.20 17.59
10 0.00 2.12 0.00 0.04 0.05 0.08 2.29
20 0.00 0.00 1.79 0.01 0.02 0.04 1.85
30 0.00 0.00 0.00 17.43 0.20 0.13 17.77
40 0.01 0.00 0.00 0.01 42.05 0.24 42.30
50 0.00 0.00 0.00 0.00 0.03 18.18 18.21
% (column) 16.56 2.12 1.79 17.75 42.91 18.87 100.00
  1. Source: Own calculations. Any summing errors are due to rounding.

Table 2
Labor supply transition matrix for single women.
Post-reform hours
Pre-reform hours 0 10 20 30 40 50 % (row)
0 17.54 0.07 1.27 3.32 2.78 0.21 25.19
10 0.04 4.02 0.18 0.66 0.53 0.08 5.51
20 0.04 0.02 8.49 0.46 0.42 0.08 9.50
30 0.17 0.00 0.02 20.72 0.30 0.05 21.27
40 0.17 0.02 0.03 0.05 31.77 0.02 32.05
50 0.14 0.01 0.10 0.09 0.08 6.07 6.49
% (column) 18.11 4.13 10.09 25.29 35.88 6.50 100.00
  1. Source: Own calculations. Any summing errors are due to rounding.

Table 3
Labor supply transition matrix for men in couples.
Post-reform hours
Pre-reform hours 0 10 20 30 40 50 % (row)
0 9.41 0.00 0.01 0.03 0.08 0.06 9.59
10 0.00 0.48 0.00 0.00 0.00 0.00 0.49
20 0.00 0.00 1.00 0.00 0.01 0.00 1.02
30 0.03 0.00 0.00 16.38 0.10 0.10 16.61
40 0.08 0.00 0.02 0.12 50.31 0.13 50.66
50 0.04 0.00 0.01 0.05 0.18 21.35 21.62
% (column) 9.55 0.49 1.05 16.58 50.68 21.65 100.00
  1. Source: Own calculations. Any summing errors are due to rounding.

Table 4
Labor supply transition matrix for women in couples.
Post-reform hours
Pre-reform hours 0 10 20 30 40 50 % (row)
0 33.78 0.14 0.26 0.19 0.24 0.02 34.63
10 0.02 10.88 0.05 0.07 0.02 0.00 11.05
20 0.01 0.00 15.71 0.02 0.06 0.00 15.82
30 0.01 0.02 0.03 16.63 0.07 0.04 16.81
40 0.00 0.00 0.01 0.02 17.96 0.04 18.04
50 0.00 0.00 0.01 0.01 0.01 3.62 3.66
% (column) 33.83 11.05 16.07 16.95 18.37 3.73 100.00
  1. Source: Own calculations. Any summing errors are due to rounding.

Table 5
Estimated preference parameters, singles.
Single Men Single Women
Income 0.0680 0.183**
(0.0363) (0.0630)
Income2 −0.000264 −0.00291*
(0.000403) (0.00121)
Leisure 0.371*** 0.842***
(0.0806) (0.123)
Leisure2 −0.00287 *** −0.00469 ***
(0.000399) (0.000496)
Leisure*income −0.00128 −0.00233**
(0.000653) (0.000779)
Leisure*age −0.00425 −0.0159**
(0.00361) (0.00536)
Leisure*age2 0.0000545 0.000205**
(0.0000464) (0.0000682)
Leisure*(East Germany?) 0.0218* −0.00203
(0.00872) (0.00982)
Leisure*(Nursing case in family?) 0.0126 −0.00950
(0.0240) (0.0215)
Leisure*foreign? 0.0297** −0.0209
(0.0112) (0.0190)
Leisure*(high education?) −0.0355** −0.0289**
(0.0113) (0.0104)
Leisure*(low education?) 0.0229** 0.0300*
(0.00848) (0.0147)
Leisure*handicapped? 0.0363** 0.00161
(0.0133) (0.0226)
Leisure*(no. of kids under 6) 0.0700 ***
(0.0122)
Leisure*(no. of kids age 6-16) 0.0358 ***
(0.00662)
  Standard Deviation
Income 0.0902 *** 0.154***
(0.0225) (0.0307)
  Observations 1116 1312
   Standard errors in parentheses
  1. *

    p < 0.05.

  2. **

    p < 0.01.

  3. *

    p < 0.001.

Table 6
A description of the sample for 1997, 1998, and 1999.
Coefficient Std. Err.
Income 0.0644** (0.0197)
Income2 0.0004954 (0.0000644)
Female’s leisure 0.486*** (0.108)
(Female’s leisure) −0.00364 *** (0.000661)
Male’s leisure 0.268* (0.107)
(Male’s leisure) −0.00319 *** (0.000315)
(Female’s leisure)*(male’s leisure) −0.000448 (0.000282)
(Female’s leisure)*(female’s*age) −0.00333 (0.00360)
(Female’s leisure)*(female’s*age)2 0.0000542 (0.0000450)
(Female’s leisure)*(East Germany?) −0.0434*** (0.00763)
(Female’s leisure)*(no. of kids under 6) 0.0701*** (0.0101)
(Female’s leisure)*(no. of kids aged 616) 0.0301 *** (0.00492)
(Female’s leisure)*(nursing case in family?) 0.0346 (0.0181)
(Female’s leisure)*(married?) 0.0320** (0.0108)
(Male’s leisure)*(male’s*age) 0.00514 (0.00470)
(Male’s leisure)*(male’s*age)2 −0.0000484 (0.0000555)
(Male’s leisure)*(East Germany?) 0.00857 (0.00881)
(Male’s leisure)*(no. of kids under 6) 0.00257 (0.00715)
(Male’s leisure)*(no. of kids aged 6-16) 0.000312 (0.00439)
(Male’s leisure)*(nursing case in family?) 0.0181 (0.0126)
(Male’s leisure)*(married?) −0.0158 (0.0110)
  Standard Deviation
Income 0.0745**
(0.0233)
  Sample Size 2015
Log-likelihood −14161577
  1. *

    p < 0.05.

  2. **

    p < 0.01.

  3. ***

    p < 0.001.

  4. Note: A question mark means that the variable is binary, coded 1 for a “Yes” and 0 for a “No”.

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