Estimating Labour Supply Elasticities Based on Cross-Country Micro Data: A Bridge Between Micro and Macro Estimates?

34 Pages Posted: 9 Oct 2014

See all articles by Markus Jäntti

Markus Jäntti

Stockholm University

Jukka Pirttila

United Nations - World Institute for Development Economics Research (UNU/WIDER); Tampere University of Technology

Håkan Selin

Uppsala Center for Fiscal Studies

Date Written: September 30, 2014

Abstract

We utilise repeated cross sections of micro data from several countries, available from the Luxembourg Income Study, LIS, to estimate labour supply elasticities, both at the intensive and extensive margin. The benefit of the data is that it spans over four decades and includes a large number of tax reform episodes, with tax rate variation arising both from cross-sectional and country-level differences. Using these data, we investigate whether micro and macro estimates differ in a systematic way. The results do not provide clear support to the view that elasticities at the macro level would be higher than corresponding micro elasticities.

Keywords: labour supply, taxation, cross-country comparisons

JEL Classification: E240, H210, J220

Suggested Citation

Jäntti, Markus and Pirttila, Jukka and Selin, Håkan, Estimating Labour Supply Elasticities Based on Cross-Country Micro Data: A Bridge Between Micro and Macro Estimates? (September 30, 2014). CESifo Working Paper Series No. 4994. Available at SSRN: https://ssrn.com/abstract=2507755

Markus Jäntti

Stockholm University ( email )

Universitetsvägen 10
Stockholm, Stockholm SE-106 91
Sweden

Jukka Pirttila (Contact Author)

United Nations - World Institute for Development Economics Research (UNU/WIDER) ( email )

Katajanokanlaituri 6B
Helsinki, FIN-00160
Finland

Tampere University of Technology ( email )

P.O. 541, Korkeakoulunkatu 8 (Festia building)
Tampere, FI-33101
Finland

Håkan Selin

Uppsala Center for Fiscal Studies ( email )

Box 513
Uppsala, 751 20
Sweden

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