Why do Europeans Work so Little?

Conny Olovsson

No 760, 2004 Meeting Papers from Society for Economic Dynamics

Abstract: Market work per person is roughly 10 percent higher in the U.S. than in Sweden. However, if we include the work carried out in home production, the total amount of work differs by only 1%. I set up a model with home production and show that differences in policy - mainly taxes - can account for the discrepancy in labor supply between Sweden and the U.S. Moreover, even though the elasticity of labor supply is rather low, labor taxes are estimated to be associated with considerable output losses. I also show that policy can account for the falling trend in market work in Sweden since 1960. The largest reduction occurs from 1960 until around 1980. After that trends for both taxes and hours worked are basically flat. This is also what the model predicts for hours worked

Keywords: Labor supply; Home Production; Taxes (search for similar items in EconPapers)
JEL-codes: D13 H24 J22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
Date: 2004
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