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Taxes, benefits and labour force participation: A survey of the quasi-experimental literature

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  • Lundberg, Jacob

    (Timbro)

  • Norell, John

    (Timbro)

Abstract

We review the literature that uses quasi-experimental methods to estimate the elasticity of labour force participation with respect to the financial gain from work. We find a wide range of elasticities, with an average of 0.38. 26 out of 31 papers find elasticities larger than 0.1, providing strong evidence that individuals respond to incentives on the extensive margin of labour supply. Elasticities are larger for women and older workers, and have declined over time.

Suggested Citation

  • Lundberg, Jacob & Norell, John, 2018. "Taxes, benefits and labour force participation: A survey of the quasi-experimental literature," Ratio Working Papers 313, The Ratio Institute.
  • Handle: RePEc:hhs:ratioi:0313
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    2. Slavko Bezeredi & Marko Ledić & Ivica Rubil & Ivica Urban, 2019. "Making work pay in Croatia: An ex-ante evaluation of two in-work benefits using miCROmod," International Journal of Microsimulation, International Microsimulation Association, vol. 12(3), pages 28-61.

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    More about this item

    Keywords

    participation elasticity; quasi-experimental methods; labour supply; extensive margin;
    All these keywords.

    JEL classification:

    • 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

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