Hours Worked: Explaining Cross-Country Differences through the Effects of Tax/Benefit Systems on the Employment Rate

Abstract

In this paper, we explain the observed lower hours worked in Central and Nordic European countries since the 80s, relative to Anglo-Saxon countries, through the effects of the tax benefit/systems on the employment rate. To this end we develop a search and matching economy a la Pissarides that then we use as laboratory to conduct several quantitative experiences using an accounting method.