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Evolution of preferences and cross-country differences in time devoted to market work

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  • Luigi Bonatti

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Abstract

I model the hypothesis that preferences evolve and permanent differences in individual attitudes towards work emerge between two countries characterized initially by identical preferences as a result of a period in which only one of the two countries is subject to regulations constraining labor supply, or as a by-product of different tax rates on labor income. Hence, the elimination of these regulations may not allow the economy thus deregulated to converge to the same hours of market work per person of the other economy, and the long-run differential in market work between economies subject to different tax rates is amplified.

Suggested Citation

  • Luigi Bonatti, 2007. "Evolution of preferences and cross-country differences in time devoted to market work," Department of Economics Working Papers 0719, Department of Economics, University of Trento, Italia.
  • Handle: RePEc:trn:utwpde:0719
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    References listed on IDEAS

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    1. Alberto F. Alesina & Edward L. Glaeser & Bruce Sacerdote, 2006. "Work and Leisure in the U.S. and Europe: Why So Different?," NBER Chapters,in: NBER Macroeconomics Annual 2005, Volume 20, pages 1-100 National Bureau of Economic Research, Inc.
    2. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages 1-33, March.
    3. Thomas Aronsson & Tomas Sjögren, 2010. "Optimal income taxation and social norms in the labor market," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(1), pages 67-89, February.
    4. Michael C Burda & Daniel S Hamermesh & Philippe Weil, 2007. "Total Work, Gender and Social Norms," Working Papers hal-00972818, HAL.
    5. Steven J. Davis & Magnus Henrekson, 2004. "Tax Effects on Work Activity, Industry Mix and Shadow Economy Size: Evidence from Rich-Country Comparisons," NBER Working Papers 10509, National Bureau of Economic Research, Inc.
    6. Linda Bell & Richard Freeman, 1994. "Why Do Americans and Germans Work Different Hours?," NBER Working Papers 4808, National Bureau of Economic Research, Inc.
    7. Blomquist, N. Soren, 1993. "Interdependent behavior and the effect of taxes," Journal of Public Economics, Elsevier, vol. 51(2), pages 211-218, June.
    8. Bell, Linda A. & Freeman, Richard B., 2001. "The incentive for working hard: explaining hours worked differences in the US and Germany," Labour Economics, Elsevier, vol. 8(2), pages 181-202, May.
    9. Mark Aguiar & Erik Hurst, 2007. "Measuring Trends in Leisure: The Allocation of Time Over Five Decades," The Quarterly Journal of Economics, Oxford University Press, vol. 122(3), pages 969-1006.
    10. Samuel Bowles, 1998. "Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 75-111, March.
    11. Bisin, Alberto & Verdier, Thierry, 1998. "On the cultural transmission of preferences for social status," Journal of Public Economics, Elsevier, vol. 70(1), pages 75-97, October.
    12. Olivier Blanchard, 2004. "The Economic Future of Europe," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 3-26, Fall.
    13. Martin Binder & Uta-Maria Niederle, 2006. "Institutions as Determinants of Preference Change – A One Way Relation?," Papers on Economics and Evolution 2006-07, Philipps University Marburg, Department of Geography.
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    More about this item

    Keywords

    Endogenous growth; time allocation; endogenous preferences; labor-market regulations; labor taxes.;

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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