Arbeitspapier

Labor supply elasticities in Europe and the US

Despite numerous studies on labor supply, the size of elasticities is rarely comparable across countries. In this paper, we suggest the first large-scale international comparison of elasticities, while netting out possible differences due to methods, data selection and the period of investigation. We rely on comparable data for 17 European countries and the US, a common empirical approach and a complete simulation of tax-benefit policies affecting household budgets. We find that wage-elasticities are small and vary less across countries than previously thought, e.g., between :2 and :6 for married women. Results are robust to several modeling assumptions. We show that differences in tax-benefit systems or demographic compositions explain little of the cross-country variation, leaving room for other interpretations, notably in terms of heterogeneous work preferences. We derive important implications for research on optimal taxation.

Language
Englisch

Bibliographic citation
Series: UCD Centre for Economic Research Working Paper Series ; No. WP11/14

Classification
Wirtschaft
Single Equation Models; Single Variables: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
Model Evaluation, Validation, and Selection
Fiscal Policies and Behavior of Economic Agents: Household
Time Allocation and Labor Supply
Subject
household labor supply
elasticity
taxation
Europe

Event
Geistige Schöpfung
(who)
Bargain, Olivier
Orsini, Kristian
Peichl, Andreas
Event
Veröffentlichung
(who)
University College Dublin, UCD School of Economics
(where)
Dublin
(when)
2011

Handle
Last update
10.03.2025, 11:43 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Bargain, Olivier
  • Orsini, Kristian
  • Peichl, Andreas
  • University College Dublin, UCD School of Economics

Time of origin

  • 2011

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