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Distortionary Taxation and Labor Supply
- Journal of Money, Credit, and Banking
- The Ohio State University Press
- Volume 35, Number 3, June 2003
- pp. 351-373
- 10.1353/mcb.2003.0018
- Article
- Additional Information
This paper examines empirically the effects of distortionary taxation on labor supply using a general equilibrium framework. The long-term relations predicted by the model are derived and tested using data from Canada, United States, Germany, and Japan. In all these countries, labor-tax changes are found to be persistent and to have played an important role in the observed downward trend in hours worked.