Economics & Sociology

ISSN: 2071-789X eISSN: 2306-3459 DOI: 10.14254/2071-789X
Index PUBMS: f5512f57-a601-11e7-8f0e-080027f4daa0
Article information
Title: To Work More or Less? The Impact of Taxes and Life Satisfaction on the Motivation to Work in Continental and Eastern Europe
Issue: Vol. 10, No 3, 2017
Published date: 10-2017 (print) / 10-2017 (online)
Journal: Economics & Sociology
ISSN: 2071-789X, eISSN: 2306-3459
Authors: Orkhan Nadirov
Tomas Bata University in Zlin

Khatai Aliyev
Azerbaijan State Economic University (UNEC)

Bruce Dehning
Chapman University
Keywords: motivation to work, labor supply, labor taxes, life satisfaction
DOI: 10.14254/2071-789X.2017/10-3/19
Index PUBMS: 1dd0f07f-f8f3-11e7-94c4-fa163e5d4f72
Language: English
Pages: 266-280 (15)
JEL classification: H20, J01, J29

Using country-level data from 2000-2013, we test the relationship between life satisfaction (measured as how people evaluate their life as a whole rather than their current feelings) and the motivation to work (measured as aggregate hours of work). Our hypothesis is that even after controlling for average labor income tax rates in countries with high and low average hours worked, there is a significant negative association between the motivation to work and life satisfaction. The main findings of this paper are that the increase in the motivation to work per employee comes at the expense of life satisfaction, and differences in average tax rates on labor income cannot account for differences in time allocation. Once life satisfaction is included, the hypotheses of previous neoclassical economic studies are almost irrelevant in determining the response of market hours to higher average tax rates on labor income. In line with our assumption, we find a negative relationship between life satisfaction and the motivation to work in the cross-country examinations. In countries with the highest hours worked (Hungary, Estonia), wealth is generally preferred to leisure and in countries with the lowest hours worked (France, Germany), leisure is preferred to wealth.


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