What Do Participation Fluctuations Tell Us About Labor Supply Elasticities?
AbstractIn this paper we use information on the cyclical variation of labor market participation to learn about the aggregate labor supply elasticity. For this purpose, we extend the standard labor market matching model to allow for endogenous participation. A model that is calibrated to replicate the variability of unemployment and participation, and the negative correlation of unemployment and GDP, implies an aggregate labor supply elasticity along the extensive margin of around 0.3 for men and 0.5 for women. This is in line with recent microeconometric estimates.
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Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2012 Meeting Papers with number 594.
Date of creation: 2012
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Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
Web page: http://www.EconomicDynamics.org/society.htm
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-20 (All new papers)
- NEP-DGE-2013-04-20 (Dynamic General Equilibrium)
- NEP-LAB-2013-04-20 (Labour Economics)
- NEP-LMA-2013-04-20 (Labor Markets - Supply, Demand, & Wages)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Petrosky-Nadeau, Nicolas & Wasmer, Etienne, 2010.
"The Cyclical Volatility of Labor Markets under Frictional Financial Markets,"
IZA Discussion Papers
5131, Institute for the Study of Labor (IZA).
- Nicolas Petrosky-Nadeau & Etienne Wasmer, 2013. "The Cyclical Volatility of Labor Markets under Frictional Financial Markets," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(1), pages 193-221, January.
- Nicolas Petrosky-Nadeau & Etienne Wasmer, . "The cyclical volatility of labor markets under frictional financial markets," GSIA Working Papers 2010-E1, Carnegie Mellon University, Tepper School of Business.
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