published in: Journal of the European Economic Association, 2004, 2 (2-3), 320-330
While there is consensus on the need to raise the time spent in the market by European
women, it is not clear how these goals should be achieved. Tax wedges, assistance in the
job search process, and part-time jobs are policy instruments that are widely debated in
policy circles. The paper presents a simple model of labour supply with market frictions and
heterogenous home production where the effects of these policies can be coherently
analysed. We show that subsidies to labour market entry increase women's entrance in the
labour market, but they also increase exits from the labour market, with ambiguous effect on
employment. Subsidies to part-time do increase employment, but they have ambiguous
effects on hours and market production. Finally, reductions in taxes on market activities that
are highly substitutable with home production have unambiguous positive effects on market
employment and production.
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