Marriage stability, taxation and aggregate labor supply in the U.S. vs. Europe

Americans work more than Europeans. Using micro-data from the United States and 17 European countries, we document that women are typically the largest contributors to the cross-country differences in work hours. We also show that there is a negative relation between taxes and annual hours worked, driven by men, and a positive relation between divorce rates and annual hours worked, driven by women. In a calibrated life-cycle model with heterogeneous agents, marriage and divorce, we find that the divorce and tax mechanisms together can explain 45% of the variation in labor supply between the United States and the European countries.


Published in:
the Journal of Monetary Economics, 72, 1-20
Year:
2015
Publisher:
Amsterdam, Elsevier Science Bv
Keywords:
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 Record created 2015-05-11, last modified 2018-03-17

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