Munich Personal RePEc Archive

The Evolution of Taxes and Hours Worked in Austria, 1970-2005

Dalton, John (2012): The Evolution of Taxes and Hours Worked in Austria, 1970-2005.

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Aggregate hours worked per working-age person decreased in Austria by 25% from 1970 to 2005. During the same time period, taxes increased, particularly the effective marginal tax rate on labor income. Using a standard general equilibrium growth model with taxes, I quantitatively assess the role played by the evolution of taxes on the evolution of hours worked in Austria. The model accounts for 76% of the observed decrease in hours worked per working-age person. My results are in line with other studies, such as Prescott (2002), which find taxes play an important role in explaining aggregate hours worked.

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