re: #512 jamesfirecat

You need to brush up on your Prescott.

Prescott studied work hours in various countries. His reasoning was that because workers would respond to wages net of marginal tax rates, he could see how responsive hours were by studying countries with large differences in marginal tax rates.

Canada, the United States, and Japan, he noted, have marginal tax rates of about 40 percent, whereas France, Germany, and Italy have marginal tax rates of about 60 percent. He showed that a labor supply elasticity of three would predict that Western Europeans would work about one-third less than North Americans and Japanese. The evidence confirmed his prediction.

Moreover, his posited labor supply elasticity is consistent with the fact that hours worked per person were much higher in France and Germany in the early 1970s when marginal tax rates were substantially lower.

Econ 101, baby.