Marriage Stability, Taxation and Aggregate Labor Supply in the U.S. vs. Europe

58 Pages Posted: 16 Jul 2011 Last revised: 13 Oct 2016

See all articles by Indraneel Chakraborty

Indraneel Chakraborty

University of Miami

Hans Aasnes Holter

University of Oslo - Department of Economics

Serhiy Stepanchuk

Ecole Polytechnique Fédérale de Lausanne

Date Written: January 6, 2015

Abstract

Americans work more than Europeans. Using micro data from the United States and 17 European countries, we document that women are typically the largest contributors to the cross-country differences in work hours. We also show that there is a negative relation between taxes and annual hours worked, driven by men, and a positive relation between divorce rates and annual hours worked, driven by women. In a calibrated life-cycle model with heterogeneous agents, marriage and divorce we find that the divorce and tax mechanisms together can explain 45% of the variation in labor supply between the United States and the European countries.

Keywords: Aggregate Labor Supply, Taxation, Marriage, Divorce, Heterogeneous Households

JEL Classification: E24, E62, H24, H31, J21, J22

Suggested Citation

Chakraborty, Indraneel and Holter, Hans Aasnes and Stepanchuk, Serhiy, Marriage Stability, Taxation and Aggregate Labor Supply in the U.S. vs. Europe (January 6, 2015). Journal of Monetary Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=971281 or http://dx.doi.org/10.2139/ssrn.971281

Indraneel Chakraborty

University of Miami ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States
312-208-1283 (Phone)

HOME PAGE: http://sites.google.com/site/chakraborty/

Hans Aasnes Holter (Contact Author)

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo
Norway
+47-22855108 (Phone)

HOME PAGE: http://sites.google.com/site/hansaholter/

Serhiy Stepanchuk

Ecole Polytechnique Fédérale de Lausanne ( email )

Station 5
Odyssea 1.04
1015 Lausanne, CH-1015
Switzerland

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