TY - JOUR
T1 - On the allocation of time – A quantitative analysis of the roles of taxes and productivities
AU - Duernecker, Georg
AU - Herrendorf, Berthold
N1 - Funding Information:
The previous version of this paper was entitled “On the Allocation of Time – A Quantitative Analysis for France and the U.S.” and is available as Duernecker and Herrendorf (2015) . For helpful comments and suggestions, we would like to thank Alexander Bick, Lei Fang, Charles Gottlieb, John Hassler, Cara McDaniel, Franck Portier, Valerie Ramey, Richard Rogerson, Todd Schoellman, Ákos Valentinyi, Gustavo Ventura and the audiences at ASU, Cardiff Business School, the Canadian Macro Study Group, the Central Banks of Chile and Finland, the CEPR Summer Symposium in International Macroeconomics, the EUI Alumni Meeting, the Federal Reserve Banks of Atlanta and St. Louis, the IIES in Stockholm, the Ifo Conference on Macroeconomics and Survey Data, the Meetings of the Society of Economics Dynamics, the NBER Summer Institute (Macro Perspectives), the Nordic Summer Symposium in Macroeconomics, the North American Meetings of the Econometric Society, Rice and Sabanci Universities, the Stockholm School of Economics, Stony Brook, and the Universities of Adelaide, Frankfurt, Hamburg, Köln, Konstanz, Mannheim, München, and St. Gallen. Herrendorf thanks the Spanish Ministry of Education for research support (Grant ECO2012-31358) and the University of Mannheim for its hospitality during a sabbatical in 2012 when this project originated. Duernecker thanks the Institute for International Economic Studies for its hospitality during 2014. All errors are our own.
Publisher Copyright:
© 2017
PY - 2018/2
Y1 - 2018/2
N2 - Basic theory suggests that increases in labor-income taxes induce people to substitute household production for market work. Time-use surveys for 12 OECD countries during 1970–2010, however, show that instead people substituted leisure for market work. To understand why this happened, we carefully measure the labor productivity of household production and find that it grew strongly in many countries of our sample. Employing a calibrated model of household production, we show that strong growth in the labor productivity of household production implies that leisure absorbs the reductions in market work after labor-income tax increases.
AB - Basic theory suggests that increases in labor-income taxes induce people to substitute household production for market work. Time-use surveys for 12 OECD countries during 1970–2010, however, show that instead people substituted leisure for market work. To understand why this happened, we carefully measure the labor productivity of household production and find that it grew strongly in many countries of our sample. Employing a calibrated model of household production, we show that strong growth in the labor productivity of household production implies that leisure absorbs the reductions in market work after labor-income tax increases.
KW - Household production
KW - Income tax
KW - Labor productivity
KW - Leisure
UR - http://www.scopus.com/inward/record.url?scp=85042667756&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85042667756&partnerID=8YFLogxK
U2 - 10.1016/j.euroecorev.2017.10.025
DO - 10.1016/j.euroecorev.2017.10.025
M3 - Article
AN - SCOPUS:85042667756
SN - 0014-2921
VL - 102
SP - 169
EP - 187
JO - European Economic Review
JF - European Economic Review
ER -