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American Economic Review Vol. 101 No. 3 2011

Interpreting Labor Supply Regressions in a Model of Full- and Part-Time Work

Yongsung Chang1; Sun-Bin Kim2; Kyooho Kwon3; Richard Rogerson4

1 Department of Economics, University of Rochester, Rochester, NY 14627, and Yonsei University. · 2 Department of Economics, Yonsei University, Seoul, Korea. · 3 Department of Economics, University of Rochester, Rochester, NY, 14627. · 4 Department of Economics, Princeton University, Princeton, NJ 08544.

Abstract

We construct a family model of labor supply that features adjustment along both the intensive and extensive margin. Intensive margin adjsutment is restricted to two values: full-time work and part-time work. Using simulated data from the steady state of the calibrated model, we examine whether standard labor supply regressions can uncover the true value of the intertemporal elasticity of labor supply parameter. We find positive estimated elasticities that are larger for women and that are highly significant, but they bear virtually no relationship to the underlying preference parameters.

DOI
10.1257/aer.101.3.476
Volume
101
Issue
3
Pages
476-481
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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