| Summary: | The joint or family-based taxation of income for married couples has arguably discouraged the labour supply of married women. Norwegian government changed the tax treatment of married couples in 2018, from a system in which a married couple is taxed as a unit (“tax class 2”) to a system in which each spouse paid taxes on his or her income (“tax class 1”). Before 2018, if the wife starts working, the household would lose the additional allowance for being taxed jointly. It triggered a high participation tax rate for married women and may have discouraged working participation. In this thesis, I study the disincentive effects for married women in Finnmark and Troms after the additional north-tax allowance for tax class 2 was abolished in 2014. I applied a difference-in-differences research design for the study, using married women in all other regions in Norway as a comparison group. The study reveals that abolishing the additional north-tax allowance for tax class 2 substantially reduced the participation tax rate for women in Finnmark and Troms, thus increasing the incentives to work. However, the result from the empirical approach finds no significant evidence that married women in Finnmark and Troms have increased their labour market participation due to the tax schedule change in 2014.
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