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Why do Europeans Work so Little?

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  • Conny Olovsson

Abstract

Market work per person is roughly 10 percent higher in the U.S. than in Sweden. However, if we include the work carried out in home production, the total amount of work differs by only 1%. I set up a model with home production and show that differences in policy - mainly taxes - can account for the discrepancy in labor supply between Sweden and the U.S. Moreover, even though the elasticity of labor supply is rather low, labor taxes are estimated to be associated with considerable output losses. I also show that policy can account for the falling trend in market work in Sweden since 1960. The largest reduction occurs from 1960 until around 1980. After that trends for both taxes and hours worked are basically flat. This is also what the model predicts for hours worked

Suggested Citation

  • Conny Olovsson, 2004. "Why do Europeans Work so Little?," 2004 Meeting Papers 760, Society for Economic Dynamics.
  • Handle: RePEc:red:sed004:760
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    References listed on IDEAS

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    1. Jonsson, Magnus & Klein, Paul, 2003. "Tax distortions in Sweden and the United States," European Economic Review, Elsevier, vol. 47(4), pages 711-729, August.
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    More about this item

    Keywords

    Labor supply; Home Production; Taxes;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • 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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