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Why do Americans Work so Much More than Europeans?

  • Edward C. Prescott

Americans now work 50 percent more than do the Germans, French, and Italians. This was not the case in the early 1970s when the Western Europeans worked more than Americans. In this paper, I examine the role of taxes in accounting for the differences in labor supply across time and across countries, in particular, the effect of the marginal tax rate on labor income. The population of countries considered is that of the G-7 countries, which are the major advanced industrial countries. The surprising finding is that this marginal tax rate accounts for the predominance of the differences at points in time and the large change in relative labor supply over time with the exception of the Italian labor supply in the early 1970s. This finding has important implications for policy, in particular for making social security programs solvent.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10316.

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Date of creation: Feb 2004
Date of revision:
Publication status: published as Prescott, Edward C. "Why Do Americans Work So Much More Than Europeans?," FRB Minneaplis - Quarterly Review, 2004, v28(1,Jul), 2-14.
Handle: RePEc:nbr:nberwo:10316
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  1. Ellen R. McGrattan & Edward C. Prescott, 2000. "Is the stock market overvalued?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall, pages 20-40.
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  17. repec:cup:macdyn:v:7:y:2003:i:5:p:691-710 is not listed on IDEAS
  18. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2003. "Accounting for the Great Depression," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 2-8.
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