Labor Supply Elasticities In Europe And The US
Despite numerous studies on labor supply, the size of elasticities is rarely comparable across countries. In this paper, the authors suggest the first large-scale international comparison of elasticities, while netting out possible differences due to methods, data selection and the period of investigation. They rely on comparable data for 17 European countries and the US, a common empirical approach and a complete simulation of tax-benefit policies affecting household budgets. They find that wage-elasticities are small and vary less across countries than previously thought, e.g., between .2 and .6 for married women. Results are robust to several modeling assumptions.