Relative Effects of Labor Taxes and Unemployment Benefits on Hours Worked per Worker and Employment

Been-Lon Chen, Mei Hsu () and Chih-Fang Lai ()
Additional contact information
Mei Hsu: College of Management, National Taiwan Normal University
Chih-Fang Lai: Institute of Economics, Academia Sinica, Taipei, Taiwan, https://www.econ.sinica.edu.tw/

No 14-A014, IEAS Working Paper : academic research from Institute of Economics, Academia Sinica, Taipei, Taiwan

Abstract: Labor supply in Europe was declined by about 30% relative to the US over the past 3 decades. The decline comes from hours per worker and employment. This paper studies a matching model and the effects of labor taxes and unemployment benefits. Labor taxes decrease hours and employment, with overstated adverse effects on hours if extensive margins are not considered. Unemployment benefits decrease employment and increase hours, with understated adverse effects on employment if intensive margins are not considered. In baseline, labor taxes and unemployment benefits together explain about 75% of declining labor supply in Europe relative to the US.

Keywords: search; labor taxes; adverse labor markets; hours worked per worker and employment (search for similar items in EconPapers)
JEL-codes: E24 E60 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2014-11
New Economics Papers: this item is included in nep-dge, nep-lab, nep-lma, nep-mac and nep-pbe
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Related works:
Journal Article: Relative Effects of Labour Taxes and Unemployment Benefits on Hours Worked Per Worker and Employment (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:sin:wpaper:14-a014

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