Problem
Prescott (2004) argues that U.S. employees work 50% more than do German, French, and Italian employees because they face lower marginal tax rates. Assuming that workers in all four countries have the same tastes toward leisure and goods, must it necessarily be true that U.S. employees will work longer hours? Use graphs to illustrate your answer, and explain why. Does Prescott's evidence indicate anything about the relative sizes of the substitution and income effects? Why or why not?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.