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Labour supply, search and taxes

Manning, Alan ORCID: 0000-0002-7884-3580 (2000) Labour supply, search and taxes. CEPDP (449). London School of Economics and Political Science. Centre for Economic Performance, London, UK. ISBN 0753013649

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Classical labour supply theory is one of the most sophisticated parts of labour economics. Yet, there is no compelling theoretical reason to believe in an outcome on a classical labour supply curve and it is unclear whether it is a good empirical description of the way in which labour markets actually work. This paper uses the techniques of search theory to analyse the impact of changes in the tax system on incentives to work when individuals do not have flexibility of hours within jobs. It is shown how the traditional comparative statics are of some use but are rarely the whole story and some comparative statics results are surprising. For example, it is shown how a revenue-neutral increase in marginal tax rates will increase incentives to work.

Item Type: Monograph (Discussion Paper)
Official URL:
Additional Information: © 2000 Alan Manning
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HJ Public Finance
Date Deposited: 30 Jul 2008 16:23
Last Modified: 15 Sep 2023 22:47

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