Marriage stability, taxation and aggregate labor supply in the U.S. vs. Europe

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, d...

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Bibliographic Details
Published in:Journal of monetary economics 2015-05, Vol.72, p.1-20
Main Authors: Chakraborty, Indraneel, Holter, Hans A., Stepanchuk, Serhiy
Format: Article
Language:English
Subjects:
Aggregate labor supply
Americans
Cross-national analysis
Divorce
Eastern Europe
Heterogeneous households
Hours of work
International comparisons
Labor supply
Labour supply
Marital stability
Marriage
Studies
Taxation
U.S.A
Western Europe
Women
Working hours
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Summary: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. •Americans, especially women, work more compared to the Europeans.•For men, we find a negative correlation between hours worked and taxation.•For women, we find a positive correlation between hours worked and divorce rates.•We develop a life-cycle model with heterogeneous agents, marriage and divorce.•Marriage stability and taxes explain 45% of the variation in labor supply.
ISSN:0304-3932
1873-1295
DOI:10.1016/j.jmoneco.2015.01.001