Full Citation

Title: Cross-country differences in preferences for leisure

Citation Type: Journal Article

Publication Year: 2021

ISBN:

ISSN: 09275371

DOI: 10.1016/j.labeco.2021.102054

NSFID:

PMCID:

PMID:

Abstract: The starting point of this paper is to document considerable cross-country variation in the “labor wedge”, a common measure of labor market frictions. Its variation is theoretically isomorphic to differences in a preference-for-leisure parameter. The paper proceeds to investigate what might explain the variation. It presents three separate empirical exercises supportive of the view that, to a substantial extent, cross-sectional labor-wedge differences are capturing systematic differences in leisure preferences. Firstly, in cross-country regressions, a cultural measure of preferences for leisure, elicited from the World Values Survey, contains economically larger and statistically more robust explanatory power than do traditional measures of labor market frictions. Secondly, following the epidemiological approach, individual-level data on labor-supply choices of descendants of immigrants in the United States and Sweden line up with what an “inherited” preference for leisure would predict. Thirdly, in the spirit of an out-of-sample test, the paper looks at the implication of differences in preferences for cross-country differences in optimal labor taxation. Economic theory suggests a negative association between preferences for leisure and labor taxes; empirical data verify the theoretical prediction.

Url: https://doi.org/10.1016/j.labeco.2021.102054

User Submitted?: No

Authors: Ek, Andreas

Periodical (Full): Labour Economics

Issue:

Volume: 72

Pages: 102054

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Methodology and Data Collection

Countries: