Heterogeneous-agent New Keynesian models with sticky nominal wages usually assume that wage-setting unions demand the same amount of hours from all households. As a result, unions do not take account of the fact that (i) households are heterogeneous in their willingness to work, and that (ii)...

Using a new comprehensive tax-benefit model, JUTTA, this paper examines how labour supply incentives – both to participate in the labour force (the “extensive” margin) and to supply extra hours of work (the “incentive” margin) – have changed in Finland in 1995-2007. The results...

We analyze the influence of monetary policy on firms’ extensive margin and productivity. Our empirical evidence for the U.S. based on a macro-financial SVAR suggests that expansionary monetary policy shocks stimulate corporate profits, reduce firm exit and increase firm entry. In the medium...

Why do US college-educated couples with children marry at higher rates than those without a college degree? We argue that investing in children is more valuable for college-educated couples, who are more likely to send their children to college. Marriage, which entails lower separation risk and...

Using longitudinal data for Argentina, we estimate the labor supply reaction of spouses and children to their husband's or father's job loss. Our findings show that job loss by the household head has a positive and significant impact on the labor supply of other household members. However, it...

We decompose permanent earnings risk into contributions from hours and wage shocks. To distinguish between hours shocks, modeled as innovations to the marginal disutility of work, and labor supply reactions to wage shocks we formulate a life-cycle model of consumption and labor supply. Both...

This paper analyses financial incentives to work in Finland from three perspectives. First, the financial incentives to work are quantified i.e. the participation tax rate (PTR) levels are calculated with numerous classifications. Second, a question of how different parts of the tax and social...

Gender gaps in labor-market outcomes often emerge with the arrival of the first child. We investigate a causal link between gender norms and labor-supply expectations within a survey experiment among 2,000 German adolescents. Using a hypothetical scenario, we document that the majority of girls...

This article describes ZEW-EviSTA®, the microsimulation model developed and used at ZEW - Centre for European Economic Research in Mannheim. The model simulates the German tax and transfer system using household micro level data. By estimating fiscal effects, labor market outcomes as well as...

The labor supply of West German married and cohabiting couples is analyzed using a discrete choice model. Following van Soest (1995), the labor supply decision is based on a household utility function which is determined by the leisure of the two spouses and net household income. Furthermore,...