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Taxes and Time Use: Fiscal Policy in a Household Production Model


  • Kelly S. Ragan


Time use data on work and leisure is presented for a broad group of OECD countries. The home production model explicitly accounts for taxes and public expenditures on day care and elder care, substitutes for work households perform at home. Taxes are important for matching time use patterns in Canada, the UK, and continental Europe, but cannot explain the high levels of market work and low levels of home work observed in Scandinavia. Subsidies of services like day care that substitute for home work are shown to be quantitatively important for bringing both market and home work predictions in line with the data. (JEL D13, E62, J13, J14)

Suggested Citation

  • Kelly S. Ragan, 2013. "Taxes and Time Use: Fiscal Policy in a Household Production Model," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(1), pages 168-192, January.
  • Handle: RePEc:aea:aejmac:v:5:y:2013:i:1:p:168-92 Note: DOI: 10.1257/mac.5.1.168

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    References listed on IDEAS

    1. Douglas Gollin, 2002. "Getting Income Shares Right," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 458-474, April.
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    Cited by:

    1. repec:red:issued:17-49 is not listed on IDEAS
    2. François Langot & Alessandra Pizzo, 2015. "Accounting for Labor Gaps," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01164076, HAL.
    3. Jäntti, Markus & Pirttilä, Jukka & Selin, Håkan, 2015. "Estimating labour supply elasticities based on cross-country micro data: A bridge between micro and macro estimates?," Journal of Public Economics, Elsevier, vol. 127(C), pages 87-99.
    4. Arbex, Marcelo, 2013. "Tax enforcement policies, tax evasion and time allocation," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(3), pages 285-293.
    5. Bick, Alexander & Fuchs-Schündeln, Nicola, 2017. "Taxation and Labor Supply of Married Couples across Countries: A Macroeconomic Analysis," IZA Discussion Papers 10504, Institute for the Study of Labor (IZA).
    6. Claudia Olivetti & Barbara Petrongolo, 2016. "The Evolution of Gender Gaps in Industrialized Countries," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 405-434, October.
    7. Michelle Rendall, . "Female Market Work, Tax Regimes, and the Rise of the Service Sector," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
    8. Üngör, Murat, 2014. "Some thought experiments on the changes in labor supply in Turkey," Economic Modelling, Elsevier, vol. 39(C), pages 265-272.
    9. repec:bpj:bejmac:v:17:y:2017:i:1:p:27:n:1 is not listed on IDEAS
    10. Hans Fehr & Manuel Kallweit & Fabian Kindermann, 2013. "Reforming Family Taxation in Germany - Labor Supply vs. Insurance Effects," CESifo Working Paper Series 4386, CESifo Group Munich.
    11. Nancy Stokey, 2015. "Catching up and falling behind," Journal of Economic Growth, Springer, vol. 20(1), pages 1-36, March.
    12. Benjamin Bridgman & Georg Duernecker & Berthold Herrendorf, 2015. "Structural Transformation, Marketization, and Household Production around the World," BEA Working Papers 0128, Bureau of Economic Analysis.
    13. Fang, Lei & Cara, McDaniel, 2014. "Home Hours in the United States and Europe," FRB Atlanta Working Paper 2014-5, Federal Reserve Bank of Atlanta.
    14. Epstein, Brendan & Mukherjee, Rahul & Ramnath, Shanthi, 2016. "Taxes and international risk sharing," Journal of International Economics, Elsevier, vol. 102(C), pages 310-326.
    15. repec:eee:dyncon:v:78:y:2017:i:c:p:88-101 is not listed on IDEAS
    16. repec:eee:eecrev:v:102:y:2018:i:c:p:169-187 is not listed on IDEAS
    17. F. Langot & L. Patureau & T. Sopraseuth, 2014. "Fiscal Devaluation and Structural Gaps," Working papers 508, Banque de France.
    18. Alessandra Casarico & Alessandro Sommacal, 2014. "Taxation and Parental Time Allocation under Different Assumptions on Altruism," CESifo Working Paper Series 4690, CESifo Group Munich.
    19. Michelle Rendall, . "Female Market Work, Tax Regimes, and the Rise of the Service Sector," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
    20. Wallenius, Johanna, 2013. "Social security and cross-country differences in hours: A general equilibrium analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 37(12), pages 2466-2482.
    21. repec:hal:journl:halshs-01164076 is not listed on IDEAS
    22. Olivetti, Claudia & Petrongolo, Barbara, 2016. "The evolution of the gender gap in industrialized countries," CEPR Discussion Papers 11034, C.E.P.R. Discussion Papers.
    23. Shirai, Daichi & Nagamachi, Kohei & Eguchi, Naotaka, 2012. "The Impacts of Firms' Technology Choice on the Gender Differences in Wage and Time Allocation: A Cross-Country Analysis," MPRA Paper 56666, University Library of Munich, Germany, revised 13 Jun 2014.
    24. Christian vom Lehn & Eric Fisher & Aspen Gorry, . "Male Labor Supply and Generational Fiscal Policy," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
    25. Hansen, G.D. & Ohanian, L.E., 2016. "Neoclassical Models in Macroeconomics," Handbook of Macroeconomics, Elsevier.

    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination


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