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Research ArticleArticles

Comparing Labor Supply Elasticities in Europe and the United States

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Olivier Bargain, Kristian Orsini and Andreas Peichl
Journal of Human Resources, July 2014, 49 (3) 723-838; DOI: https://doi.org/10.3368/jhr.49.3.723
Olivier Bargain
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Kristian Orsini
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Andreas Peichl
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Abstract

We suggest the first large-scale international comparison of labor supply elasticities for 17 European countries and the United States using a harmonized empirical approach. We find that own-wage elasticities are relatively small and more uniform across countries than previously considered. Nonetheless, such differences do exist, and are found not to arise from different tax-benefit systems, wage/hour levels, or demographic compositions across countries, suggesting genuine differences in work preferences across countries. Furthermore, three other findings are consistent across countries: The extensive margin dominates the intensive margin; for singles, this leads to larger responses in low-income groups; and income elasticities are extremely small.

  • Received July 2012.
  • Accepted July 2013.
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Journal of Human Resources: 49 (3)
Journal of Human Resources
Vol. 49, Issue 3
1 Jul 2014
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Comparing Labor Supply Elasticities in Europe and the United States
Olivier Bargain, Kristian Orsini, Andreas Peichl
Journal of Human Resources Jul 2014, 49 (3) 723-838; DOI: 10.3368/jhr.49.3.723

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Comparing Labor Supply Elasticities in Europe and the United States
Olivier Bargain, Kristian Orsini, Andreas Peichl
Journal of Human Resources Jul 2014, 49 (3) 723-838; DOI: 10.3368/jhr.49.3.723
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  • Article
    • Abstract
    • I. Introduction
    • II. Common Empirical Approach
    • III. Results
    • IV. Assessing Cross-Country Differences in Elasticity Size
    • V. Concluding Discussion
    • Appendix 1 Descriptive Statistics and Hour Distribution
    • Appendix 2 Estimates of the Wage Equation
    • Appendix 3 Labor-Supply Model: Estimates
    • Appendix 4 Labor Supply Elasticities
    • Appendix 5 Robustness Checks
    • Appendix 6 Assessing Cross-Country Differences in Elasticity Size
    • Footnotes
    • References
  • Figures & Data
  • Info & Metrics
  • References
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