De Economist

, Volume 156, Issue 1, pp 25–43 | Cite as

The Wage Elasticity of Labour Supply: A Synthesis of Empirical Estimates

  • Michiel Evers
  • Ruud De Mooij
  • Daniel Van VuurenEmail author
Open Access


This paper performs a meta-analysis of empirical estimates of uncompensated labour supply elasticities. For the Netherlands, we find that an elasticity of 0.5 for women and 0.1 for men is a good reflection of what the literature reveals. The elasticity for men hardly differs between countries, but for women some cross-country variation is found. The increasing participation rate of women may lead to a somewhat lower elasticity in the future. Both the specification of the hours function and the estimation method are found to affect elasticity estimates.


labour supply uncompensated wage elasticity meta-analysis 

JEL Code(s)

J22 H3 


  1. Alesina, A., E. Glaeser and B. Sacerdote (2005), ‘Work and Leisure in the U.S. and Europe; Why so different,’ NBER Working Paper no. 11278.Google Scholar
  2. Arellano M., Meghir C. (1992) ‘Female Labour Supply and on the Job search: An Empirical Model Estimated Using Complementary Data Sets’. Review of Economic Studies 59, 537–559CrossRefGoogle Scholar
  3. Arrufat J., Zabalza A. (1986) ‘Female Labor Supply with Taxation, Random Preferences, and Optimization Errors’. Econometrica 54(1): 47–64CrossRefGoogle Scholar
  4. Ballard C., Shoven J., Whalley J. (1985) ‘General Equilibrium Computations of the Marginal Welfare Costs of Taxes in the United States’. American Economic Review 75(1): 128–137Google Scholar
  5. Bargain, O. (2005), ‘On Modelling Household Labor Supply with Taxation,’ IZA Working Paper 1455, Bonn, IZA.Google Scholar
  6. Blau, F. and L. Kahn (2005), ‘Changes in the Labor Supply Behavior of Married Women: 1980–2000,’ Working Paper, 11230, NBER.Google Scholar
  7. Blau F., Kahn L. (2007) ‘Changes in the Labor Supply Behavior of Married Women: 1980–2000’. Journal of Labor Economics 25: 393–438CrossRefGoogle Scholar
  8. Blomquist S. (1983) ‘The Effect of Income Taxation on the Labor Supply of Married Men in Sweden’. Journal of Public Economics 22, 169–197CrossRefGoogle Scholar
  9. Blomquist S. (1996). ‘Estimation Methods for Male Labor Supply Functions: How to Take Account of Nonlinear Taxes’. Journal of Econometrics 70, 383–405CrossRefGoogle Scholar
  10. Blomquist S., Hansson-Brusewitz U. (1990) ‘The Effect of Taxes on Male and Female Labor Supply in Sweden’. Journal of Human Resources 25, 317–357CrossRefGoogle Scholar
  11. Blomquist S., Newey W. (2002) ‘Nonparametric Estimation with Nonlinear Budget Sets’. Econometrica 70, 2455–2480CrossRefGoogle Scholar
  12. Blundell, R. and T. MaCurdy (1999), ‘Labor Supply: A Review of alternative approaches,’ in: O. Ashenfelter and D. Card (eds.), ‘Handbook of Labor Economics,’ Vol. 3A, Ch. 27, Amsterdam, North Holland.Google Scholar
  13. Blundell R., Duncan A., Meghir C. (1998) ‘Estimating Labor Supply Responses Using Tax Reforms’. Econometrica 66: 827–861CrossRefGoogle Scholar
  14. Blundell R., Duncan A., McCrae J., Meghir C. (2000) ‘The Labour Market Impact of the Working Families Tax Credit’. Fiscal Studies 21, 75–104CrossRefGoogle Scholar
  15. Bonin, H., W. Kempe and H. Schneider (2002), ‘Household Labor Supply Effects of Low-Wage Subsidies in Germany,’ Discussion Paper, 637, IZA.Google Scholar
  16. Bourguignon F., Magnac T. (1990) ‘Labor Supply and Taxation in France’. Journal of Human Resources 25, 358–389CrossRefGoogle Scholar
  17. Browning E. (1987) ‘On the Marginal Welfare Cost of Taxation’. American Economic Review 77(1): 11–23Google Scholar
  18. Burtless G., Hausman J. (1978) ‘The Effect of Taxation on Labor Supply: Evaluating the Gary Negative Income Experiment’. American Economic Review 72, 488–479Google Scholar
  19. Cogan J. (1981) ‘Fixed Costs and Labor Supply’. Econometrica 49, 945–963CrossRefGoogle Scholar
  20. Colombino U., del Boca D. (1990). ‘The Effect of Taxes on Labor Supply in Italy’. Journal of Human Resources 25, 390–414CrossRefGoogle Scholar
  21. de Mooij R., Ederveen S. (2003) ‘Taxation and Foreign Direct Investment: A Synthesis of Empirical Research’. International Tax and Public Finance 10, 673–693CrossRefGoogle Scholar
  22. Devereux P. (2004) ‘Changes in Relative Wages and Family Labor Supply’. Journal of Human Resources 39, 696–722CrossRefGoogle Scholar
  23. Douglas P. (1934) Theory of Wages. Macmillan, New YorkGoogle Scholar
  24. Ecklöf M., Sacklén H. (2000) ‘The Hausman–MaCurdy Controversy. Why Do Results Differ between Studies?. Journal of Human Resources 35, 204–220CrossRefGoogle Scholar
  25. Eissa, N. and H. Hoynes (2004), ‘The Hours of Work Response of Married Couples: Taxes and the Earned Income Tax Credit,’ Tax Policy and Labor Market Performance, (forthcoming).Google Scholar
  26. Ericson P., Flood L. (1997) ‘A Monte Carlo Evaluation of Labor Supply Models’. Empirical Economics 22, 431–460CrossRefGoogle Scholar
  27. Euwals R. (2001) ‘Female Labour Supply, Flexibility of Working Hours and Job Mobility’. Economic Journal 111: 2.120–2.134CrossRefGoogle Scholar
  28. Euwals R., van Soest A. (1999) ‘Desired and Actual Labour Supply of Unmarried Men and Women in the Netherlands’. Labour Economics 6, 95–118CrossRefGoogle Scholar
  29. Flood L., MaCurdy T. (1992) ‘Work Disincentive Effects of Taxes: An Empirical Analysis of Swedish Men’. Carnegie–Rochester Conference Series on Public Policy 37, 239–278CrossRefGoogle Scholar
  30. Graafland, J., R. de Mooij, A. Nibbelink and A. Nieuwenhuis (2001), Mimicing Tax Policies and the Labour Market, North Holland.Google Scholar
  31. Hall, R. (1973), ‘Wages, Income and Hours of Work,’ in: G.G. Cain and H.W. Watts (eds.), Income Maintenance and Labor Supply, Institute for Research on Poverty Monograph Series.Google Scholar
  32. Hausman J. (1980) ‘The Effect of Wages, Taxes and Fixed Costs on Women’s Labor Force Participation’. Journal of Public Economics 14, 161–194CrossRefGoogle Scholar
  33. Hausman, J. (1981), ‘The Effect of Taxes on Labour Supply,’ in: H. Aaron and J. Pechman (eds.), How Taxes Affect Economic Behavior, Brookings, Washington D.C.Google Scholar
  34. Hausman J., Ruud P. (1984) ‘Family Labor Supply with Taxes’. American Economic Review 74, 242–248Google Scholar
  35. Heckman J. (1979) ‘Sample Selection Bias as a Specification Error’. Econometrica 46, 931–959CrossRefGoogle Scholar
  36. Heim, B. and B. Meyer (2003), ‘Structural Labor Supply Models when Budget Constraints are Nonlinear,’ Working Paper, Duke University, Northwestern University.Google Scholar
  37. Keef S., Roberts L. (2004). ‘The Meta-Analysis of Partial Effect Sizes’. British Journal of Mathematical and Statistical Psychology 57, 97–129CrossRefGoogle Scholar
  38. Killingsworth M., Heckman J. (1986). ‘Female Labor Supply: A Survey’. In: Ashenfelter O., Layard R. (eds). Handbook of Labor Economics, Vol. I. North-Holland, Amsterdam, pp. 103–204Google Scholar
  39. Kosters, M. (1966), ‘Effects of an Income Tax on Labor Supply,’ in: A. Harberger and J. Martin (eds.), The Taxation of Income from Capita, Studies of Government Finance, Washington, D.C.Google Scholar
  40. Kuismanen, M. (1997), ‘Labour Supply, Unemployment and Income Taxation: An Empirical Application,’ Working Paper, Government Institute for Economic Research, Helsinki, University College London.Google Scholar
  41. MaCurdy T., Green P., Paarsch H. (1990) ‘Assessing Empirical Approaches for Analyzing Taxes and Labor Supply’. Journal of Human Resources 25, 415–490CrossRefGoogle Scholar
  42. Mincer, J. (1963), ‘Labour Force Participation of Married Women: A Study of Labor Supply, Aspects of Labor Economics,’ Universities-National Bureau Conference Series No. 14, pp. 63–105.Google Scholar
  43. Moffitt R. (1990) ‘The Econometrics of Kinked Budget Constraints’. Journal of Economic Perspectives 4(2): 119–139Google Scholar
  44. Mroz T. (1987) ‘The Sensitivity of an Empirical Model of Married Woman’s Hours of Work to Economic and Statistical Assumptions’. Econometrica 55, 765–799CrossRefGoogle Scholar
  45. Pencavel, J. (1986), ‘Labor Supply of Men,’ in: O. Ashenfelter and R. Layard (eds.), Handbook of Labor Economics, North-Holland.Google Scholar
  46. Pencavel J. (2002) ‘A Cohort Analysis of the Association between Work Hours and Wages among Men’. Journal of Human Resources 37, 251–274CrossRefGoogle Scholar
  47. Prescott, E. (2004), ‘Why Do Americans Work So Much More than Europeans,’ NBER Working Paper no. 10316.Google Scholar
  48. Saez E. (2003) ‘The Effect of Marginal Tax Rates on Income: A Panel Study of ‘Bracket Creep’. Journal of Public Economics 87, 1231–1258CrossRefGoogle Scholar
  49. van Soest A., Woittiez I., Kapteyn A. (1990) ‘Labor Supply, Income Taxes, and Hours Restrictions in the Netherlands’. Journal of Human Resources 25, 517–558CrossRefGoogle Scholar
  50. Triest R. (1990) ‘The Effect of Income Taxation on Labor Supply in the United States’. Journal of Human Resources 25, 491–516CrossRefGoogle Scholar
  51. van Soest A. (1995) ‘Structural Models of Family Labor Supply: A Discrete Choice Approach’. Journal of Human Resources 30, 63–88CrossRefGoogle Scholar
  52. van Soest A., Das M., Gong X. (2002) ‘A Structural Labour Supply Model with Flexible Preferences’. Journal of Econometrics 107, 345–374CrossRefGoogle Scholar
  53. Woittiez I., Kapteyn A. (1998) ‘Social Interactions and Habit Formation in a Model of Female Labour Supply’. Journal of Public Economics 70, 185–205CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC. 2008

Authors and Affiliations

  • Michiel Evers
    • 1
  • Ruud De Mooij
    • 2
    • 3
    • 4
    • 5
    • 6
  • Daniel Van Vuuren
    • 7
    • 8
    Email author
  1. 1.Ministry of Economic AffairsThe HagueThe Netherlands
  2. 2.CPB Netherlands Bureau for Economic Policy AnalysisThe HagueThe Netherlands
  3. 3.Erasmus Universiteit RotterdamRotterdamThe Netherlands
  4. 4.Tinbergen InstituteRotterdamThe Netherlands
  5. 5.NetsparTilburgThe Netherlands
  6. 6.CESifoMunichGermany
  7. 7.CPB Netherlands Bureau for Economic Policy AnalysisThe HagueThe Netherlands
  8. 8.NetsparTilburgThe Netherlands

Personalised recommendations