Tax reform increased the number of married women in employment

Budget 2000 introduced a radical reform of the tax treatment of Irish couples which was anticipated to increase the labour supply of women. There was considerable debate and controversy at the time, with differing views as to how great the increase in married women’s participation would be. Analysis by Dr. Karina Doorley (ESRI) now shows that the employment rate of married women increased by about 5 percentage points as a result of the reform.

Up to 2000, Ireland had a system of joint taxation, which allowed a working spouse to use the tax allowances, credits and bands of a non-working spouse. This imposed a higher tax rate on the non-earning spouse if they joined the labour market, making it less likely that they would take up employment. Budget 2000 partly individualised Ireland’s income taxation system through the introduction of a non-transferable element of the standard rate band. This increased the financial incentive for non-working spouses (typically women) to work. There was a clear response, as identified in this paper, indicating the potential of tax reform to address labour supply issues.

The international trend in recent decades has been to move towards individualised taxation systems. This research provides policymakers with evidence of how a previous reform of this type affected labour supply.

Commenting on the research, Karina Doorley stated “This analysis indicates that the partial individualisation of the Irish taxation system achieved one of its stated goals, to increase the incentive for spouses to join the labour market.” A broader evaluation of the impact of the reform, and the potential for any further extension of individualisation would also need to examine the associated changes in income distribution.  Further research on these issues is currently under way, and will also encompass issues relating to childcare and eldercare.


  • Karina Doorley received the Barrington Medal for 2017/2018 for this research paper. The paper is available here:
  • She will deliver the Barrington Lecture titled Taxation, work and gender equality in Ireland explaining the research findings of this study. The lecture takes place at 5:30pm on Thursday 25 January in the Royal Irish Academy, 19 Dawson Street.