Economic Incentives, Home Production, and Gender Identity Norms

Gender identity norms are possible drivers of persistent gender inequalities in the labour market, but the extent to which such norms restrict the behaviour of couples is debated. This column examines how households in Sweden changed their allocation of home production in response to the introduction of a tax credit that altered the marginal tax rates (and the relative take-home pay) in different ways for spouses in couples. It finds that immigrant couples, who tend to come from countries with more traditional gender norms than Sweden, responded more strongly to a reduction in the husband’s tax rate than the wife’s. By not responding to wives’ tax cuts, these couples may forgo as much as £2,000 per year in household disposable income.