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Taxes, social subsidies, and the allocation of work time

Ngai, L. Rachel and Pissarides, Christopher A. ORCID: 0000-0002-0695-058X (2011) Taxes, social subsidies, and the allocation of work time. American Economic Journal: Macroeconomics, 3 (4). pp. 1-26. ISSN 1945-7707

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Identification Number: 10.1257/mac.3.4.1


We examine the allocation of hours of work across industrial sectors in OECD countries. We find large disparities across three sector groups, one that produces goods without home substitutes, and two others that have home substitutes but are treated differently by welfare policy. We attribute the disparities to the countries' tax and subsidy policies. High taxation substantially reduces hours in sectors that have close home substitutes but less so in other sectors. Subsidies increase hours in the subsidized sectors that have home substitutes. We compute these policy effects for 19 OECD countries.

Item Type: Article
Official URL:
Additional Information: © 2011 AEA
Divisions: Economics
Centre for Economic Performance
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HJ Public Finance
JEL classification: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies
H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H31 - Household
J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J22 - Time Allocation and Labor Supply
Date Deposited: 07 Nov 2011 11:42
Last Modified: 16 May 2024 01:18
Funders: Centre for Economic Performance

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