Applied Economics Lunch Seminar

Du 20/02/2024 de 12:30 à 13:30

Salle R2.21

REUTZEL Fabian (PSE)

Implicit Discrimination in Unemployment Benefits

In this project we document how a wildly unknown interaction between the tax and transfer system results in an implicit discrimination of women. In Germany, the choice of withholding tax classes determines the level of unemployment benefit, so married couples can increase unemployment benefits for one partner at the expense of the other partner. We document that this mechanism is essentially unknown based on survey evidence. At the same time, more than 60% of the married couples shift unemployment benefits from one partner to the other. We show that this choice for households results in a substantial implicit gender discrimination along the whole income distribution. For example, for the median female income, the unemployment benefit for a married women are 6% smaller than for a married man with the same income. We estimate the effect of the German institutional setting on various outcomes and find a large heterogeneity in effect size particular with respect to partner income. Overall, we find that compared to a system without withholding tax class, women stay unemployed longer and find lower paying jobs, while men stay unemployed shorter and find better paying jobs. A reform of the withhold tax system allows us to abstract from choice of withholding tax classes and, hence, to isolate the effect of the unemployment benefits level.