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Estimating Labour Supply Elasticities Based on Cross-Country Micro Data: A Bridge between Micro and Macro Estimates?

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  • Markus Jäntti

    ()

  • Jukka Pirttilä

    ()

  • Håkan Selin

    ()

Abstract

We utilise repeated cross sections of micro data from several countries, available from the Luxembourg Income Study, LIS, to estimate labour supply elasticities, both at the intensive and extensive margin. The benefit of the data is that it spans over four decades and includes a large number of tax reform episodes, with tax rate variation arising both from cross-sectional and country-level differences. Using these data, we investigate whether micro and macro estimates differ in a systematic way. The results do not provide clear support to the view that elasticities at the macro level would be higher than corresponding micro elasticities.

Suggested Citation

  • Markus Jäntti & Jukka Pirttilä & Håkan Selin, 2013. "Estimating Labour Supply Elasticities Based on Cross-Country Micro Data: A Bridge between Micro and Macro Estimates?," LIS Working papers 583, LIS Cross-National Data Center in Luxembourg.
  • Handle: RePEc:lis:liswps:583
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    Cited by:

    1. Kory Kroft & Kucko Kavan & Etienne Lehmann & Johannes Schmieder, 2015. "Optimal Income Taxation with Unemployment and Wage Responses: A Sufficient Statistics Approach," Working Papers hal-01292126, HAL.
    2. repec:wfo:wstudy:60797 is not listed on IDEAS
    3. Kotamäki Mauri, 2016. "Participation Tax Rates in Finland, Earnedincome Tax Credit Investigated," Discussion Papers 107, Aboa Centre for Economics.
    4. Valentina Bosetti & Marco Maffezzoli, 2014. "Occasionally binding emission caps and real business cycles," Working Papers 523, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    5. McKay Andy & Pirttilä Jukka & Schimanski Caroline, 2018. "The Elasticity of Formal Work in African Countries," Working Papers 1820, University of Tampere, School of Management, Economics.
    6. Robert Osei & Jukka Pirttilä & Pia Rattenhuber, 2017. "Quantifying the impacts of expanding social protection on efficiency and equity: Evidence from a behavioural microsimulation model for Ghana," WIDER Working Paper Series 193, World Institute for Development Economic Research (UNU-WIDER).
    7. Määttänen, Niku & Salminen, Tomi, 2015. "Unemployment Accounts - A Finnish Application," ETLA Working Papers 29, The Research Institute of the Finnish Economy.
    8. repec:wfo:monber:y:2018:i:2:p:105-120 is not listed on IDEAS
    9. repec:kap:itaxpf:v:26:y:2019:i:3:d:10.1007_s10797-018-9524-1 is not listed on IDEAS
    10. 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.
    11. Bartels, Charlotte & Shupe, Cortnie, 2018. "Drivers of participation elasticities across Europe: gender or earner role within the household?," EUROMOD Working Papers EM7/18, EUROMOD at the Institute for Social and Economic Research.
    12. repec:bla:scandj:v:120:y:2018:i:1:p:211-241 is not listed on IDEAS

    More about this item

    Keywords

    Labour supply; earnings; taxation; cross country comparisons;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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