Labour supply in Austria: an assessment of recent developments and the effects of a tax reform
in: Martin Kahanec, Mikuláš Luptácik, Philipp Schmidt-Dengler, Economic Policy in a Dynamic Environment. Selected Papers of the 2016 Joint Annual Meeting of the Slovak Economic Association
and the Austrian Economic Association
We apply a structural discrete choice framework to estimate income-specific own-wage and cross-wage labour supply elasticities
in regard to working hours and participation for married and single males and females in Austria. We use data from the Austrian
components of the European Statistics of Income and Living Conditions from 2004 to 2012. Own-wage elasticities are very small
for males and slightly higher for females. Cross-wage elasticities are practically zero for males and slightly negative for
females. Male and female own-wage elasticities decrease with higher incomes. Over time female labour supply elasticities decrease.
Furthermore, we assess the labour supply and fiscal effects of the Austrian tax reform of 2016. We find a total increase in
working hours by 0.71 percent. The labour supply effects are stronger on the intensive margin, for females and for low-income
earners. On total the tax reform induces a tax relief of 4.7 billion €. The positive effects on tax burden and disposable
income increase with the individual income.