Labour Taxes and Work Hours in Australia

30 Pages Posted: 16 May 2007

See all articles by Anton Hallam

Anton Hallam

The University of Western Australia - UWA Business School

Ernst Juerg Weber

The University of Western Australia - UWA Business School

Date Written: March 2007

Abstract

In the 1970s, work hours in Europe were similar to work hours in America, but today Europeans work less than Americans. Prescott (2004) attributes the decline in European work hours to an increase in the effective marginal tax rate on labour income. The Australian labour market experience confirms that the taxation of labour income is an important determinant of the decision to work. In Australia taxes and work hours did not change much in the long-run, but Australian work hours rebounded after a temporary increase in taxes in the 1980s. The resilience of Australian work hours suggests that a return to the tax rates of the 1970s would restore the European labour supply.

Keywords: labour supply, taxation of labour income, quantitative general equilibrium model

JEL Classification: D90, E20, H20, J22

Suggested Citation

Hallam, Anton and Weber, Ernst Juerg, Labour Taxes and Work Hours in Australia (March 2007). Available at SSRN: https://ssrn.com/abstract=986182 or http://dx.doi.org/10.2139/ssrn.986182

Anton Hallam

The University of Western Australia - UWA Business School ( email )

Crawley, Western Australia 6009
Australia

Ernst Juerg Weber (Contact Author)

The University of Western Australia - UWA Business School ( email )

Crawley, WA 6009
Australia

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