Tax-reforms, normal and actual working hours and welfare in the beginning of the 20th’s Denmark

Abstract

We estimate a labor supply function and the impact of tax-reforms on men and women’s labor supply using normal and actual working hours. The data stem from the Danish Time-Use Surveys in 2001 and 2008/09 which include information from stylized survey questions and time-use diaries. The results suggest that the wage-rate effects are larger when using normal working hours compared to actual working hours, and that income effects are less sensitive to working hour measures. We also find that the associations between marginal tax rate and normal and actual working hours are smaller for men and women satisfied with their leisure time than for unsatisfied men and women. Lastly, an increase in the normal labor supply was greater for the tax-reform treated group than for the control group, while increase in the actual labor supply was smaller for the treated group. The last findings are not significant, however, probably due to a small number of observations.