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Labour Taxes and Work Hours in Australia

Author

Listed:
  • Anton Hallam
  • Ernst Juerg Weber

    (UWA Business School, The University of Western Australia)

Abstract

In the 1970s, work hours in Europe were similar to work hours in America, but today Europeans work less than Americans. Prescott (2004) attributes the decline in European work hours to an increase in the effective marginal tax rate on labour income. The Australian labour market experience confirms that the taxation of labour income is an important determinant of the decision to work. In Australia taxes and work hours did not change much in the long-run, but Australian work hours rebounded after a temporary increase in taxes in the 1980s. The resilience of Australian work hours suggests that a return to the tax rates of the 1970s would restore the European labour supply.

Suggested Citation

  • Anton Hallam & Ernst Juerg Weber, 2007. "Labour Taxes and Work Hours in Australia," Economics Discussion / Working Papers 07-09, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:07-09
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    References listed on IDEAS

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    Cited by:

    1. Paul Frijters & David Johnston & Michael Shields, 2012. "The Optimality of Tax Transfers: What does Life Satisfaction Data Tell Us?," Journal of Happiness Studies, Springer, vol. 13(5), pages 821-832, October.

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    More about this item

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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