Are taxes a good predictor of time use patterns? Examining the role of some key elasticities

Manuel Gómez

Economic Modelling, 2016, vol. 55, issue C, 394-400

Abstract: A home-production model is used to explain the allocation of time between leisure, work and home production. We show that differences in taxes alone explain to a great extent the time use patterns in a set of OECD countries once several key elasticities — the elasticity of substitution between market- and home-produced goods, the Frisch elasticity of labor supply, and the relative risk aversion — are set according to empirical evidence. We also show that a realistic calibration of these key elasticities results to be more important than introducing government expenditures substitutive for home-produced goods in order to bring the model's time use predictions in line with data. This is true even for Scandinavian countries, which had posed a challenge in previous studies.

Keywords: Taxes; Hours worked; Leisure; Home production (search for similar items in EconPapers)
JEL-codes: D1 J2 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:55:y:2016:i:c:p:394-400

DOI: 10.1016/j.econmod.2016.03.006

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