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Comparing Labor Supply Elasticities in Europe and the United States: New Results
- Journal of Human Resources
- University of Wisconsin Press
- Volume 49, Number 3, Summer 2014
- pp. 723-838
- 10.1353/jhr.2014.0017
- Article
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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.