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Working hours, status consumption, and optimal taxation

Hart, Robert (2021). Working hours, status consumption, and optimal taxation. (NL, NJ) > Dept. of Economics, Sveriges lantbruksuniversitet. Working Paper Series / Swedish University of Agricultural Sciences, Department of Economics ; 2021:01
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Abstract

We build a growth model focusing exclusively on household choices, including both pollution and consumption externalities.The consumption of status goods helps to motivate labour supply, and the importance of this effect increases as productivity increases.This accounts for two stylized facts: firstly, although labour supply declines with income at low incomes (both for timeseries and cross-sectional countrydata, and for cross-sectional individual data), the decline levels off at high incomes; and secondly, that expenditure tends to shift towards energy- and resource-intensive goods with rising income. To achieve first best—withalong-run increase in leisure and decline in pollution—taxes on both emissions and status goods should increase with productivity. When we parameterize the model to match patterns of labour supplya crossleading economies, the shift of taxation to status goods causes a significant drop in labour supply, and an even larger drop in polluting emissions.

Authors/Creators:Hart, Robert
Title:Working hours, status consumption, and optimal taxation
Series Name/Journal:Working Paper Series / Swedish University of Agricultural Sciences, Department of Economics
Year of publishing :2021
Number:2021:01
Publisher:Swedish University of Agricultural Sciences, Department of Economics
ISSN:1401-4068
Language:English
Publication Type:Report
Article category:Other scientific
Version:Published version
Full Text Status:Public
Subjects:(A) Swedish standard research categories 2011 > 5 Social Sciences > 502 Economics and Business > Economics
URN:NBN:urn:nbn:se:slu:epsilon-p-110215
Permanent URL:
http://urn.kb.se/resolve?urn=urn:nbn:se:slu:epsilon-p-110215
ID Code:22792
Faculty:NJ - Fakulteten för naturresurser och jordbruksvetenskap
Department:(NL, NJ) > Dept. of Economics
Deposited By: SLUpub Connector
Deposited On:17 Mar 2021 18:35
Metadata Last Modified:06 Apr 2021 12:39

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