Rethinking Labour Supply: Contract Theory and Unions
AbstractThis paper suggests a new approach to the economics of labour supply. Conventional econometric studies conclude, with rare exceptions, that the response of men's hours to increases in wages is small and negative. Yet policy-makers in many countries have argued that incentive effects are large and have set low marginal tax rates accordingly. The evidence in this paper, from a sample of more than twenty-three thousand UK male employees, suggests that, for non-unionized labour markets, the labour supply wage elasticity is considerably large than the existing literature has suggested. The UK offers and unusually valuable test-bed for male labour supply modelling because it has a simple flat rate tax across the majority of the income distribution and offers two natural experiments that circumvent the simultaneity problems that have dogged the literature.
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Bibliographic InfoPaper provided by Department of Economics, Keele University in its series Keele Department of Economics Discussion Papers (1995-2001) with number 96/10.
Date of creation: 1996
Date of revision:
Contact details of provider:
Postal: Department of Economics, University of Keele, Keele, Staffordshire, ST5 5BG - United Kingdom
Phone: +44 (0)1782 584581
Fax: +44 (0)1782 717577
Web page: http://www.keele.ac.uk/depts/ec/cer/
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Postal: Department of Economics, Keele University, Keele, Staffordshire ST5 5BG - United Kingdom
Other versions of this item:
- Oswald, A. & Walker, I, 1994. "Rethinking Labor Supply: Contract Theory and Unions," Working Papers 207, University of Sydney, School of Economics.
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- Ehing, Daniel, 2013. "Unter- und Überbeschäftigung in Deutschland: Eine Analyse wesentlicher Einflussfaktoren auf die Unterbeschäftigung in Teilzeit," FZG Discussion Papers 53, Research Center for Generational Contracts (FZG), University of Freiburg.
- Adriana Cassoni, 1997. "A brief survey on the role of trade unions in labour market," Documentos de Trabajo (working papers) 0697, Department of Economics - dECON.
- Adriana Cassoni, 1999. "Labour demand in Uruguay before and after re-unionisation," Documentos de Trabajo (working papers) 0199, Department of Economics - dECON.
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