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Taxes, social subsidies, and the allocation of work time

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  • Ngai, L. Rachel
  • Pissarides, Christopher A.

Abstract

We examine the allocation of hours of work across industrial sectors in OECD countries. We find large disparities across three sector groups, one that produces goods without home substitutes, and two others that have home substitutes but are treated differently by welfare policy. We attribute the disparities to the countries' tax and subsidy policies. High taxation substantially reduces hours in sectors that have close home substitutes but less so in other sectors. Subsidies increase hours in the subsidized sectors that have home substitutes. We compute these policy effects for 19 OECD countries.

Suggested Citation

  • Ngai, L. Rachel & Pissarides, Christopher A., 2011. "Taxes, social subsidies, and the allocation of work time," LSE Research Online Documents on Economics 39262, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:39262
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    References listed on IDEAS

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    Cited by:

    1. Claudia Olivetti & Barbara Petrongolo, 2014. "Gender gaps across countries and skills: Demand, supply and the industry structure," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(4), pages 842-859, October.
    2. 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).
    3. Claudia Olivetti & Barbara Petrongolo, 2011. "Gender Gaps Across Countries and Skills: Supply, Demand and the Industry Structure," CEP Discussion Papers dp1093, Centre for Economic Performance, LSE.
    4. Mark A. Aguiar & Erik Hurst & Loukas Karabarbounis, 2011. "Time Use During Recessions," NBER Working Papers 17259, National Bureau of Economic Research, Inc.
    5. Pierre Cahuc & Yann Algan, 2009. "Civic Virtue and Labor Market Institutions," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 111-145, January.
    6. Üngör, Murat, 2014. "Some thought experiments on the changes in labor supply in Turkey," Economic Modelling, Elsevier, vol. 39(C), pages 265-272.
    7. repec:bpj:bejmac:v:17:y:2017:i:1:p:27:n:1 is not listed on IDEAS
    8. Fang Lei & McDaniel Cara, 2017. "Home hours in the United States and Europe," The B.E. Journal of Macroeconomics, De Gruyter, vol. 17(1), pages 1-27, January.
    9. repec:eee:dyncon:v:78:y:2017:i:c:p:88-101 is not listed on IDEAS
    10. repec:eee:eecrev:v:102:y:2018:i:c:p:169-187 is not listed on IDEAS
    11. Benjamin Bridgman, 2016. "Engines of Leisure," BEA Working Papers 0137, Bureau of Economic Analysis.
    12. Gómez, Manuel A., 2016. "Are taxes a good predictor of time use patterns? Examining the role of some key elasticities," Economic Modelling, Elsevier, vol. 55(C), pages 394-400.
    13. Ragan, Kelly S., 2013. "Quantitative evidence on the welfare effects of home sector fiscal policy," Economics Letters, Elsevier, vol. 118(2), pages 400-403.

    More about this item

    Keywords

    ISI; macroeconomics; tax; social subsidies;

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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