Comparing labor supply elasticities in Europe and the US: New results

Arbeitspapier

We suggest the first large-scale international comparison of labor supply elasticities for 17 European countries and the US, separately by gender and marital status. Measurement differences are netted out by using a harmonized empirical approach and comparable data sources. We find that own-wage elasticities are relatively small and much more uniform across countries than previously thought. Differences exist nonetheless and are found not to arise from different tax-benefit systems or demographic compositions across countries. Thus, we cannot reject that countries have genuinely different preferences. Three other results, important for welfare analysis, are consistent over all countries: the extensive (participation) margin dominates the intensive (hours) margin; for singles, this leads to larger labor supply responses in low-income groups; income elasticities are extremely small everywhere. Finally, the results for cross-wage elasticities in couples are opposed between regions, consistent with complementarity in spouses' leisure in the US versus substitution in spouses' household production in Europe.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 6735

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities ; Model Evaluation, Validation, and Selection ; Fiscal Policies and Behavior of Economic Agents: Household ; Time Allocation and Labor Supply
• Subject: household labor supply ; elasticity ; taxation ; Europe ; Arbeitsangebot ; Elastizität ; Haushaltsökonomik ; Ehe ; Geschlecht ; Vergleich ; Europa ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bargain, Olivier ; Orsini, Kristian ; Peichl, Andreas
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/62500
• Last update: 10.03.2025, 11:43 AM CET