The tax system features disincentives for full-time employment of second earners in
In Germany, in comparison to other OECD countries, the tax burden
on household labour income rises strongly when a second person takes up employment.
This reflects joint taxation of couples and free health insurance for married
spouses as well as the progressive income tax schedule. To avoid the higher marginal tax,
second earners (mostly women) have incentives to take up part-time employment in the
context of a minijob, which is almost fully exempt from tax for income up to EUR 450 per
Indeed, 20% of women only work on a minijob and women account for over 60% of
all minijobbers. Eliminating these disincentives would remove significant barriers to women
participating more fully in the labour market and to pursuing their careers. Such steps
would raise womens’ hours worked substantially (Bach et al., 2011; Bonin et al., 2013;
Böhmer et al., 2014).