Taxes and Marriage: A Two-Sided Search Analysis

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This paper analyzes the effects that differential tax treatment of married and single individuals has on marriage behavior, using a version of the two-sided search model of Burdett-Wright (1998). The main results are the following: i) an increase in the 'marriage tax' reduces the number of marriages; ii) an indirect strategic effect due to two-sided search considerations mitigates the impact that changes in the 'marriage tax' have on marriage formation; iii) the quantitative analysis of the model indicate that, in the US, large increases in the 'marriage tax' are associated with small changes in the number of marriages.