Working Paper: NBER ID: w12786
Authors: Lee Ohanian; Andrea Raffo; Richard Rogerson
Abstract: We document large differences in trend changes in hours worked across OECD countries over the period 1956-2004. We then assess the extent to which these changes are consistent with the intratemporal first order condition from the neoclassical growth model. We find large and trending deviations from this condition, and that the model can account for virtually none of the changes in hours worked. We then extend the model to incorporate observed changes in taxes. Our findings suggest that taxes can account for much of the variation in hours worked both over time and across countries.
Keywords: Labor Supply; Taxes; OECD; Neoclassical Growth Model
JEL Codes: E2; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Taxes (H29) | Labor Supply (J20) |
| Neoclassical Growth Model (O41) | Hours Worked (J22) |
| Taxes (Consumption and Labor Income) (H31) | Hours Worked (J22) |
| Taxes (H29) | Variations in Labor Supply (J22) |
| Model Assumptions (C51) | Hours Worked (J22) |