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Home production, labor taxation and trade account

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Author Info
Luigi Bonatti ()
Abstract

The two-country growth model developed in this paper incorporates home production and distinguishes between a market sector producing services that can also be home-produced and a market sector producing goods without home-produced substitutes. This distinction coincides in the model with the distinction between the sector producing internationally tradable goods and the sector producing nontradables. Hence, differentials in labor tax rates across countries, which determine differences in the allocation of households’ time between market activities and home activities, influence also the mix of tradable and nontradable goods that characterizes the market output of each country, thus affecting their bilateral trade balance.

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Publisher Info
Paper provided by Department of Economics, University of Trento, Italia in its series Department of Economics Working Papers with number 0715.

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Date of creation: 2007
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Handle: RePEc:trn:utwpde:0715

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Related research
Keywords: Market time; employment rate; nontradable goods; two-country model; endogenous growth.;

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Find related papers by JEL classification:
F10 - International Economics - - Trade - - - General
F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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    Other versions:
  2. Alberto Alesina & Edward L. Glaeser & Bruce Sacerdote, 2005. "Work and Leisure in the U.S. and Europe: Why So Different?," NBER Working Papers 11278, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Ellen McGrattan & Richard Rogerson & Randall Wright, 1995. "An equilibrium model of the business cycle with household production and fiscal policy," Staff Report 191, Federal Reserve Bank of Minneapolis. [Downloadable!]
    Other versions:
  4. Steven J. Davis & Magnus Henrekson, 2004. "Tax Effects on Work Activity, Industry Mix and Shadow Economy Size: Evidence from Rich-Country Comparisons," NBER Working Papers 10509, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Antonello D’Agostino & Roberta Serafini & Melanie Ward, 2006. "Sectoral Explanations of Employment in Europe: The Role of Services," IZA Discussion Papers 2257, Institute for the Study of Labor (IZA). [Downloadable!]
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  6. Catherine L. Mann, 2004. "The US Current Account, New Economy Services, and Implications for Sustainability," Review of International Economics, Blackwell Publishing, vol. 12(2), pages 262-276, 05. [Downloadable!] (restricted)
  7. Richard B. Freeman & Ronald Schettkat, 2005. "Marketization of household production and the EU-US gap in work," Economic Policy, CEPR, CES, MSH, vol. 20(41), pages 6-50, 01. [Downloadable!] (restricted)
  8. Stephen L. Parente & Richard Rogerson & Randall Wright, 2000. "Homework in Development Economics: Household Production and the Wealth of Nations," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 680-687, August. [Downloadable!] (restricted)
  9. D'Agostino, Antonello & Serafini, Roberta & Ward, Melanie, 2006. "Sectoral explanations of employment in Europe: the role of services," Research Technical Papers 8/RT/06, Central Bank & Financial Services Authority of Ireland (CBFSAI). [Downloadable!]
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