Skip to main content
Article thumbnail
Location of Repository

Labour supply, search and taxes

By Alan Manning


Classical labour supply theory is one of the most sophisticated parts of labour economics. Yet, there is no compelling theoretical reason to believe in an outcome on a classical labour supply curve and it is unclear whether it is a good empirical description of the way in which labour markets actually work. This paper uses the techniques of search theory to analyse the impact of changes in the tax system on incentives to work when individuals do not have flexibility of hours within jobs. It is shown how the traditional comparative statics are of some use but are rarely the whole story and some comparative statics results are surprising. For example, it is shown how a revenue-neutral increase in marginal tax rates will increase incentives to work

Topics: HD Industries. Land use. Labor, HJ Public Finance
Publisher: Centre for Economic Performance, London School of Economics and Political Science
Year: 2000
OAI identifier:
Provided by: LSE Research Online

Suggested articles


  1. (1984). Earnings, Unemployment and the allocation of time over time’, Review of Economic Studies, doi
  2. (1983). Efficiency Aspects of the Financing of Unemployment Insurance and Other Government Expenditure’, Review of Economic Studies; doi
  3. (1998). Equilibrium Wage Differentials and Employer Size’, International Economic Review. doi
  4. (1982). Estimation of a Labour Supply Model with Censoring Due to Unemployment and Underemployment’, Review of Economic Studies; doi
  5. (1994). Job Creation and Job Destruction in the Theory of Unemployment’, doi
  6. (1993). Job Search in a Dynamic Environment-An Empirical Analysis’, Oxford Economic Papers,
  7. (1986). Labor Supply of Men: a Survey’, doi
  8. (1978). Labor Supply Under Uncertainty’, doi
  9. (1990). Labor Supply with a Minimum Hours Threshold’, doi
  10. (1998). Labor Supply: A Review of Alternative Approaches’, forthcoming in Orley Ashenfelter and David Card (eds) Handbook of Labor Economics, volume IV, doi
  11. (1985). Modelling the Process of Job Search’, doi
  12. (1986). On the Interpretation of Unemployment in Empirical Labour Supply Analysis’, in R. Blundell and I. Walker (eds) Unemployment, search and labour supply, Cambridge: doi
  13. (1998). The impact of employment tax cuts on unemployment and wages: the role of unemployment benefits and tax structure’, doi
  14. (1977). Unemployment Insurance and Job Search Decisions’, doi
  15. (1993). Wage-Setting and the Tax System: Theory and Evidence for the U.K.’, doi
  16. (1995). Welfare States and Unemployment’, doi
  17. (1993). What Has Been Learned about Labor Supply in the Past Twenty Years?’,
  18. (1998). Why Are the Unemployed So Unhappy? Evidence from Panel Data’, doi

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.