Review of Economics of the Household

, Volume 16, Issue 2, pp 541–561 | Cite as

The effects of separate taxation on labor participation of married couples. An empirical analysis using propensity score

  • Amadeo Fuenmayor
  • Rafael Granell
  • Mauro Mediavilla


Up to 1987 the Spanish Income Tax imposed compulsory joint filing for married couples. However, the 1988 reform allowed spouses to choose between joint and separate taxation, involving a reduction in tax rates for secondary earners. Our aim is to analyze this reform as a quasi-natural experiment, assessing the effects of tax changes on labor participation. To find out the causal effect we adopt the difference-in-differences technique. We use data from the ‘Spanish Income Tax Panel 1982–1998’. Our results show that, as a consequence of differential tax changes, married women in families more strongly affected by the fiscal reform increase their labor participation more than secondary earners from families less affected by the reform. The participation rate for secondary earners in the treatment group increases by 9.4 percentage points whereas the control group increases their participation rate by 7.8 percentage points. We define the treatment group as those secondary earners in relatively low-income families in year 1987 and the control group as those in middle-high income families, because the former experiences a stronger reduction in tax rates than the latter. As a result, we can attribute the 1.6-percentage-point-increase in participation rates to the 1988 income tax reform.


Income tax Treatment effects Propensity score Joint filing Tax unit 

JEL Classification

H24 H31 C15 



We gratefully acknowledge the contributions of the seminar participants for their very helpful comments and suggestions at the IX Summer School in Public Economics, Georgia State University, Atlanta (2013), XXI Meeting of Public Economics, University of Girona, Spain (2014), and at a seminar given in our Department of Applied Economics at the University of Valencia (2014).

Compliance with ethical standards

Conflict of interest

The authors declare that they have no conflict of interest.


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Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  1. 1.Department of Applied EconomicsUniversity of ValenciaValenciaSpain
  2. 2.Barcelona Institute of Economics, C/ John M. Keynes, 1-11, 08034BarcelonaSpain

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