Taxes, social subsidies, and the allocation of work time

L. Rachel Ngai and Christopher Pissarides

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

Abstract: We examine the allocation of hours of work across industrial sectors in OECD countries. We find large disparities across three sector groups, one that produces goods without home substitutes, and two others that have home substitutes but are treated differently by welfare policy. We attribute the disparities to the countries' tax and subsidy policies. High taxation substantially reduces hours in sectors that have close home substitutes but less so in other sectors. Subsidies increase hours in the subsidized sectors that have home substitutes. We compute these policy effects for 19 OECD countries.

Keywords: ISI; macroeconomics; tax; social subsidies (search for similar items in EconPapers)
JEL-codes: H24 H31 J22 (search for similar items in EconPapers)
Date: 2011-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

Published in American Economic Journal: Macroeconomics, October, 2011, 3(4), pp. 1-26. ISSN: 1945-7707

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Related works:
Journal Article: Taxes, Social Subsidies, and the Allocation of Work Time (2011)
Working Paper: Taxes, Social Subsidies and the Allocation of Work Time (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:39262

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