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Labour supply, search and taxes

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  • Manning, Alan

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.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 80 (2001)
Issue (Month): 3 (June)
Pages: 409-434

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Handle: RePEc:eee:pubeco:v:80:y:2001:i:3:p:409-434

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Web page: http://www.elsevier.com/locate/inca/505578

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  18. Burdett, Kenneth, et al, 1984. "Earnings, Unemployment, and the Allocation of Time over Time," Review of Economic Studies, Wiley Blackwell, vol. 51(4), pages 559-78, October.
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Cited by:
  1. El Badaoui, Eliane & Strobl, Eric & Walsh, Frank, 2007. "The Formal Sector Wage Premium and Firm Size," IZA Discussion Papers 3145, Institute for the Study of Labor (IZA).
  2. Alok Kumar, 2008. "Capital Tax, Minimum Wage, and Labor Market Outcomes," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(1), pages 133-154, January.
  3. William M. Gentry & R. Glenn Hubbard, 2002. "The Effects of Progressive Income Taxation on Job Turnover," NBER Working Papers 9226, National Bureau of Economic Research, Inc.
  4. Joel Shapiro, 2001. "Income taxation in a frictional labor market," Economics Working Papers 559, Department of Economics and Business, Universitat Pompeu Fabra.
  5. Teresa Schl├╝ter, 2013. "Real Wages, Amenities and the Adjustment of Working Hours Across Regional Labour Markets," SERC Discussion Papers 0130, Spatial Economics Research Centre, LSE.

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