Working Papers

The Marriage Earnings Gap 

with Elena Herold — Job Market Paper

What happens to earnings upon marriage? Linking administrative and survey data from Germany, we show that there is a marriage earnings gap. Even after accounting for the child penalty, women’s earnings drop by 20% after marriage. We show that the marriage earnings gap results from both the extensive margin (women stop working) and the intensive margin (women work fewer hours), but not from a decrease in hourly wages. Labor supply disincentives from joint taxation can explain about one third of the marriage earnings gap, while we find no effect for labor supply incentives from changes in divorce law. Leveraging variation in norms created by the German separation, we find that gender norms are another important driver behind the marriage earnings gap.

Optional (Non-)Filing and Effective Taxation 

with Tobias Hauck — Accepted, Journal of Public Economics

Many countries have automatic wage tax withholding systems with tax non-filing options for some taxpayers. We show that this has sizable and potentially unintended implications for effective taxation because taxes are often over-withheld. Low-income taxpayers pay more taxes than they have to because they frequently do not file. Using German administrative tax data, we document that the average non-filer overpays 119€ in one year, equivalent to a 1.2 percentage point increase in the average tax rate. Non-filing acts as a form of “reverse evasion”: It weakens the effective tax progressivity by increasing tax rates at the bottom of the income distribution.

Media coverage (German): Handelsblatt 

Policy report (German): Automatische Einkommensteuererstattungen zur Entlastung niedriger Einkommen. Wirtschaftsdienst 101, 956–959 (2021). 

Work in Progress

Opt-in or Opt-out? The Power of Defaults in Pension Enrollment Choices 

with Tabea Bucher-Koenen and Joachim Winter)

Default setting has been shown to be a powerful tool to enhance enrollment in pension programs, which often involve multidimensional choices and complex choice menus. We document that the effect is less pronounced when the choice menu is simple and it is easy to opt out. We study low-income employees who face a binary choice: to enroll or not to enroll in the German public pension insurance. Using administrative data, we show that program participation increases by 23 percentage points after the introduction of automatic enrollment. However, the majority of individuals actively opt out.  We document that behind this average effect, there is substantial heterogeneity across different groups of individuals. We use linked survey data to further explore this heterogeneity and show that the default is particularly powerful for individuals with low financial literacy. 

Lost in Deduction: Taxpayers' Mistakes when Itemizing

Taxpayers can reduce their tax liability by itemizing deductions and claiming more than the standard deduction they are automatically entitled to. I show that taxpayers also itemize when this does not reduce their tax liability. This is a mistake because itemizing has costs but no benefits and is thus strictly dominated by not itemizing. Using German administrative income tax data, I document that 57 percent of tax filers make this mistake at least once. They itemize even when the sum does not exceed the standard deduction, or when they already face a zero tax liability before itemizing, or both.

On the effects of the child-age dependent reform of alimony in Germany

with David Koll

Publications