Labour supply, search and taxes

Alan Manning

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Classical labour supply theory is one of the most sophisticated parts of labour economics. Yet, there is no compelling theoretical reason to believe in an outcome on a classical labour supply curve and it is unclear whether it is a good empirical description of the way in which labour markets actually work. This paper uses the techniques of search theory to analyse the impact of changes in the tax system on incentives to work when individuals do not have flexibility of hours within jobs. It is shown how the traditional comparative statics are of some use but are rarely the whole story and some comparative statics results are surprising. For example, it is shown how a revenue-neutral increase in marginal tax rates will increase incentives to work.

Keywords: Labour supply; taxes; search (search for similar items in EconPapers)
JEL-codes: E6 J01 R14 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2000-02
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http://eprints.lse.ac.uk/20202/ Open access version. (application/pdf)

Related works:
Journal Article: Labour supply, search and taxes (2001)
Working Paper: Labour Supply, Search and Taxes (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:20202

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