Journal of Labor Economics Vol. 42 No. 2 2024
Labor Supply within the Firm
open access
Abstract
There is substantial variation in working time even within employer-employee matches, yet estimates of the Frisch elasticity of labor supply can be near zero. This paper proposes a tractable theory of earnings and working time to interpret these observations. Production complementarities attenuate the response of working time to idiosyncratic, or worker-specific, shocks, but firm-wide shocks are mediated by preference parameters. The model can be identified using firm-worker matched data, revealing a Frisch elasticity of around 0.5. A quasi-experimental approach that exploits only idiosyncratic variation would find an elasticity less than half this.
- DOI
- 10.1086/723519
- Volume
- 42
- Issue
- 2
- Pages
- 511-548
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref