Steady-State Labor Supply Elasticities: An International Comparison

Olivier Bargain and Andreas Peichl

No 1322, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: This note provides an extensive survey of studies estimating steady-state labor supply elasticities for Western Europe and the US. Differences are driven by the heterogeneity in work preferences across countries and by methodological difference across studies (data, selection or model estimation and specification). While the former exists but is shown to be relatively small (Bargain et al., 2013), we focus here on modeling choices: Large elasticities are mainly found in studies estimated in the 1980s and relying on the Hausman approach. More recent estimates based on discrete-choice models with tax-benefit simulations show smaller and more similar estimates across countries. While we confirm that elasticities decline over time in the US, there is some evidence that both time effect and modeling choices affect estimates for Europe.

Keywords: household labor supply; elasticity; taxation; Europe; US. (search for similar items in EconPapers)
JEL-codes: C25 C52 H31 J22 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2013-03-27
New Economics Papers: this item is included in nep-dcm, nep-lab and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

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Working Paper: Steady-State Labor Supply Elasticities: An International Comparison (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:1322

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