Taxes, Health Care Provision and Aggregate Hours of Work

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A recent literature has studied the role of increases in labor taxes and transfers on the evolution of hours of work across OECD countries. Much of this literature studies this issue in a one sector model. This paper develops a two sector model in order to assess various features of health care financing on aggregate hours of work. A key result is that when health care is publicly financed but rationed, the distortion on aggregate hours of work is large and independent of the tax required to finance the system. Moreover, this effect increases over time as aggregate income increases.

Original languageEnglish (US)
Pages (from-to)222-232
Number of pages11
JournalGlobal Economic Review
Issue number3
StatePublished - Jul 2 2016

All Science Journal Classification (ASJC) codes

  • General Economics, Econometrics and Finance
  • Political Science and International Relations
  • Business and International Management


  • Taxes
  • health care
  • hours of work


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