Advanced Search
MyIDEAS: Login to save this paper or follow this series

What Do Participation Fluctuations Tell Us About Labor Supply Elasticities?

Contents:

Author Info

  • Haefke, Christian
  • Reiter, Michael

Abstract

In 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 micro-econometric estimates. --

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://econstor.eu/bitstream/10419/62055/1/VfS_2012_pid_89.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century with number 62055.

as in new window
Length:
Date of creation: 2012
Date of revision:
Handle: RePEc:zbw:vfsc12:62055

Contact details of provider:
Email:
Web page: http://www.socialpolitik.org/
More information through EDIRC

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. Bargain, Olivier & Orsini, Kristian & Peichl, Andreas, 2011. "Labor Supply Elasticities in Europe and the US," EUROMOD Working Papers EM1/11, EUROMOD at the Institute for Social and Economic Research.
  2. Pietro Garibaldi & Etienne Wasmer, 2005. "Equilibrium Search Unemployment, Endogenous Participation, And Labor Market Flows," Journal of the European Economic Association, MIT Press, MIT Press, vol. 3(4), pages 851-882, 06.
  3. Rudanko, Leena, 2009. "Labor market dynamics under long-term wage contracting," Journal of Monetary Economics, Elsevier, Elsevier, vol. 56(2), pages 170-183, March.
  4. Christopher A. Pissarides, 2009. "The Unemployment Volatility Puzzle: Is Wage Stickiness the Answer?," Econometrica, Econometric Society, Econometric Society, vol. 77(5), pages 1339-1369, 09.
  5. Richard Rogerson & Johanna Wallenius, 2007. "Micro and Macro Elasticities in a Life Cycle Model With Taxes," NBER Working Papers 13017, National Bureau of Economic Research, Inc.
  6. Marcus Hagedorn & Iourii Manovskii, 2013. "Job Selection and Wages over the Business Cycle," American Economic Review, American Economic Association, American Economic Association, vol. 103(2), pages 771-803, April.
  7. Haefke, Christian & Sonntag, Marcus & van Rens, Thijs, 2012. "Wage Rigidity and Job Creation," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8968, C.E.P.R. Discussion Papers.
  8. Nicolas Petrosky-Nadeau & Etienne Wasmer, . "The cyclical volatility of labor markets under frictional financial markets," GSIA Working Papers, Carnegie Mellon University, Tepper School of Business 2010-E1, Carnegie Mellon University, Tepper School of Business.
  9. Krusell, Per & Mukoyama, Toshihiko & Rogerson, Richard & Sahin, Aysegül, 2011. "A three state model of worker flows in general equilibrium," Journal of Economic Theory, Elsevier, Elsevier, vol. 146(3), pages 1107-1133, May.
  10. Yongsung Chang & Sun-Bin Kim, 2006. "From Individual To Aggregate Labor Supply: A Quantitative Analysis Based On A Heterogeneous Agent Macroeconomy ," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(1), pages 1-27, 02.
  11. Haefke, Christian & Reiter, Michael, 2006. "Endogenous Labor Market Participation and the Business Cycle," IZA Discussion Papers 2029, Institute for the Study of Labor (IZA).
  12. Pascal Michaillat, 2010. "Do Matching Frictions Explain Unemployment? Not in Bad Times," CEP Discussion Papers dp1024, Centre for Economic Performance, LSE.
  13. James S. Costain & Michael Reiter, 2003. "Business Cycles, Unemployment Insurance, and the Calibration of Matching Models," CESifo Working Paper Series 1008, CESifo Group Munich.
  14. Raj Chetty & Adam Guren & Day Manoli & Andrea Weber, 2011. "Are Micro and Macro Labor Supply Elasticities Consistent? A Review of Evidence on the Intensive and Extensive Margins," American Economic Review, American Economic Association, American Economic Association, vol. 101(3), pages 471-75, May.
  15. Tripier, Fabien, 2004. "Can the labor market search model explain the fluctuations of allocations of time?," Economic Modelling, Elsevier, Elsevier, vol. 21(1), pages 131-146, January.
  16. Floden, M. & Linde, J., 1998. "Idiosyncratic Risk in the U.S. and Sweden: Is there a Role for Government Insurance?," Papers, Stockholm - International Economic Studies 654, Stockholm - International Economic Studies.
  17. van Soest, Arthur & Das, Marcel & Gong, Xiaodong, 2002. "A structural labour supply model with flexible preferences," Journal of Econometrics, Elsevier, Elsevier, vol. 107(1-2), pages 345-374, March.
  18. Simon Burgess & Helene Turon, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies – A Comment," Bristol Economics Discussion Papers 05/573, Department of Economics, University of Bristol, UK.
  19. Lars Ljungqvist & Thomas J. Sargent, 2011. "A Labor Supply Elasticity Accord?," American Economic Review, American Economic Association, American Economic Association, vol. 101(3), pages 487-91, May.
  20. Marcus Hagedorn & Iourii Manovskii, 2008. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies Revisited," American Economic Review, American Economic Association, American Economic Association, vol. 98(4), pages 1692-1706, September.
  21. Barbara Petrongolo & Christopher Pissarides, 2000. "Looking into the black box: a survey of the matching function," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 2122, London School of Economics and Political Science, LSE Library.
  22. Marcelo Veracierto, 2002. "On the cyclical behavior of employment, unemployment and labor force participation," Working Paper Series, Federal Reserve Bank of Chicago WP-02-12, Federal Reserve Bank of Chicago.
  23. Michael Reiter, 2006. "Solving heterogeneous-agent models by projection and perturbation," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 972, Department of Economics and Business, Universitat Pompeu Fabra.
  24. Michael P. Keane & Richard Rogerson, 2012. "Reconciling Micro and Macro Labor Supply Elasticities: A Structural Perspective," Economics Papers 2012-W12, Economics Group, Nuffield College, University of Oxford.
  25. Toshihiko Mukoyama & Richard Rogerson & Aysegul Sahin & Per Krusell, 2011. "Labor Supply and Frictions over the Business Cycle," 2011 Meeting Papers 100, Society for Economic Dynamics.
  26. Pries, Michael & Rogerson, Richard, 2009. "Search frictions and labor market participation," European Economic Review, Elsevier, Elsevier, vol. 53(5), pages 568-587, July.
  27. Michael Reiter, 2006. "Embodied technical change and the fluctuations of wages and unemployment," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 980, Department of Economics and Business, Universitat Pompeu Fabra.
  28. Yongsung Chang & Sun-Bin Kim, 2007. "Heterogeneity and Aggregation: Implications for Labor-Market Fluctuations," American Economic Review, American Economic Association, American Economic Association, vol. 97(5), pages 1939-1956, December.
  29. Robert Shimer, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies," American Economic Review, American Economic Association, American Economic Association, vol. 95(1), pages 25-49, March.
Full references (including those not matched with items on IDEAS)

Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. What Do Participation Fluctuations Tell Us About Labor Supply Elasticities?
    by Christian Zimmermann in NEP-DGE blog on 2011-11-14 02:24:43
  2. What Do Participation Fluctuations Tell Us About Labor Supply Elasticities?
    by Christian Zimmermann in NEP-DGE blog on 2011-11-14 02:24:43
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Bertinelli, Luisito & Cardi, Olivier & Sen, Partha, 2013. "Deregulation shock in product market and unemployment," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 37(4), pages 711-734.
  2. Michael Reiter, 2013. "On The Welfare Costs Of Unemployment Fluctuations," 2013 Meeting Papers, Society for Economic Dynamics 962, Society for Economic Dynamics.
  3. Sanjay K. Chugh & Christian Merkl, 2013. "Efficiency and Labor Market Dynamics in a Model of Labor Selection," Boston College Working Papers in Economics, Boston College Department of Economics 846, Boston College Department of Economics.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:zbw:vfsc12:62055. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.