Comparing labor supply elasticities in Europe and the United States: new results

Publication type:

Journal Article

Authors

Olivier Bargain, Kristian Orsini and Andreas Peichl

Publication date

1 Jun 2014

Summary

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.

Published in

Journal of Human Resources

DOI

https://doi.org/10.3368/jhr.49.3.723

Subjects

Labour Market, Welfare Benefits, Microsimulation and Taxation