NBER

Hitoshi Tsujiyama

Goethe University Frankfurt
House of Finance
60323 Frankfurt
Germany

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Goethe University Frankfurt

NBER Working Papers and Publications

December 2019Why are Average Hours Worked Lower in Richer Countries?
with Alexander Bick, Nicola Fuchs-Sch√ľndeln, David Lagakos: w26554
Why are average hours worked per adult lower in rich countries than in poor countries? We consider two natural explanations: income effects in preferences, in which leisure becomes more valuable when income rises, and distortionary tax systems, which are more prevalent in richer countries. To assess the importance of these two forces, we build a simple model of labor supply by heterogeneous individuals and calibrate it to match international data on labor income taxation, government transfers relative to GDP, and hours worked per adult. The model predicts that income effects are the main driving force behind the decline of average hours worked with GDP per capita. We reach a similar conclusion in an extended model that matches cross-country patterns of labor supply along the extensive and ...

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