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Long-term changes in labor supply and taxes: Evidence from OECD countries, 1956-2004

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  • Ohanian, Lee
  • Raffo, Andrea
  • Rogerson, Richard

Abstract

We document large differences in trend changes in hours worked across OECD countries between 1956 and 2004. We assess the extent to which these changes are consistent with the intratemporal first order condition from the neoclassical growth model, augmented with taxes on labor income and consumption expenditures. We find that the model can account for most of the trend changes in hours worked measured in the data. Differences in taxes explain much of the variation in hours worked both over time and across countries.

Suggested Citation

  • Ohanian, Lee & Raffo, Andrea & Rogerson, Richard, 2008. "Long-term changes in labor supply and taxes: Evidence from OECD countries, 1956-2004," Journal of Monetary Economics, Elsevier, vol. 55(8), pages 1353-1362, November.
  • Handle: RePEc:eee:moneco:v:55:y:2008:i:8:p:1353-1362
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    More about this item

    Keywords

    Labor supply Wedges Taxes;

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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