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CEP discussion paper
Welfare Policy and the Distribution of Hours of Work
L. Rachel Ngai and Christopher A. Pissarides
December 2009
Paper No' CEPDP0962:
Full Paper (pdf)

JEL Classification: E02; H53; I18; I38; J22

Tags: hours of work; employment shares; home production; childcare; tax wedge; welfare state; social subsidies

We examine the distribution of hours of work across industrial sectors in OECD countries. We find large disparities when sectors are divided into three groups: one that produces goods without home substitutes and two others that have home substitutes — health and social work, and all others. We attribute the disparities to the countries’ tax and subsidy policies. High taxation substantially reduces hours in sectors that have close home substitutes but less so in other sectors. Health and social care subsidies increase hours in that sector. We compute these effects for nineteen OECD countries.