Micro and Macro Elasticities in a Life Cycle Model With Taxes / Richard Rogerson, Johanna Wallenius.

Format:

Book

Author/Creator:

Rogerson, Richard.

Contributor:

National Bureau of Economic Research.

Wallenius, Johanna.

Series:

Working Paper Series (National Bureau of Economic Research) no. w13017.

NBER working paper series no. w13017

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2007.

Summary:

We build a life cycle model of labor supply that incorporates changes along both the intensive and extensive margin and use it to assess the consequences of changes in tax and transfer policies on equilibrium hours of work. We find that changes in taxes have large aggregate effects on hours of work. Moreover, we find that there is no inconsistency between this result and the empirical finding of small labor elasticities for prime age workers. In our model, micro and macro elasticities are effectively unrelated. Our model is also consistent with other cross-country patterns.

Notes:

Print version record

April 2007.