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The Anatomy of the Extensive Margin Labor Supply Response

Author

Listed:
  • Bastani, Spencer

    (Department of Economics and Statistics, Linnaeus University)

  • Moberg, Ylva

    (Department of Economics)

  • Selin, Håkan

    (Institute for Evaluation of Labour Market and Education Policy)

Abstract

No previous quasi-experimental paper has systematically examined the relationship between the extensive margin labor supply response to taxation and the employment level. We model the labor force participation margin and estimate participation responses for married women in Sweden using population-wide administrative data and a solid identification strategy. The participation elasticity is more than twice as large in the lowest-skill sample (with relatively low employment) as compared with the highest-skill sample (with high employment). Our analysis suggests that cross- and within country comparisons of participation elasticities always should be made with reference to the relevant employment level.

Suggested Citation

  • Bastani, Spencer & Moberg, Ylva & Selin, Håkan, 2016. "The Anatomy of the Extensive Margin Labor Supply Response," Working Paper Series 2016:11, Uppsala University, Department of Economics.
    • Handle: RePEc:hhs:uunewp:2016_011
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    References listed on IDEAS

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    Cited by:

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    2. Spencer Bastani & Jacob Lundberg, 2017. "Political preferences for redistribution in Sweden," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(4), pages 345-367, December.
    3. Lorenz, Svenja & Zwick, Thomas, 2021. "Money also is sunny in a retiree’s world: financial incentives and work after retirement," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 55, pages 1-021.
    4. Hansen, Emanuel, 2021. "Optimal income taxation with labor supply responses at two margins: When is an Earned Income Tax Credit optimal?," Journal of Public Economics, Elsevier, vol. 195(C).
    5. Kalin, Salla & Kyyrä, Tomi & Matikka, Tuomas, 2023. "Combining Part-time Work and Social Benefits: Empirical Evidence from Finland," Working Papers 159, VATT Institute for Economic Research.
    6. Maria Coelho & Aieshwarya Davis & Alexander Klemm & Carolina Osorio-Buitron, 2024. "Gendered taxes: the interaction of tax policy with gender equality," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(5), pages 1413-1460, October.
    7. Lundberg, Jacob, 2017. "Analyzing tax reforms using the Swedish Labour Income Microsimulation Model," Working Paper Series 2017:12, Uppsala University, Department of Economics.
    8. Olof Rosenqvist & Håkan Selin, 2024. "Explaining Benefit Take-up Behavior – The Role of Financial Incentives," CESifo Working Paper Series 11402, CESifo.
    9. Spencer Bastani, 2025. "The marginal value of public funds: a brief guide and application to tax policy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 32(4), pages 919-956, August.
    10. Klára Kalíšková, 2020. "Tax and transfer policies and the female labor supply in the EU," Empirical Economics, Springer, vol. 58(2), pages 749-775, February.
    11. Rosenqvist, Olof & Selin, Håkan, 2023. "Explaining benefit take-up behavior – the role of incentives and habits," Working Paper Series 2023:24, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    12. Bastani, Spencer, 2023. "The marginal cost of public funds: A brief guide," Working Paper Series 2023:14, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    13. 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.

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    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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