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A model of labor supply, fixed costs and work schedules

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  • Castex, Gonzalo
  • Dechter, Evgenia

Abstract

To analyze labor supply allocations, we propose a three-dimensional labor supply framework that distinguishes between hours worked per day, days worked per week and workweeks. Individuals make labor supply choices given heterogeneous schedule-dependent fixed costs of work. The three margins are not perfect substitutes. Leisure on days not worked in a workweek has the largest weight in preferences, leisure on weeks off has the smallest weight. We use the model to analyze heterogeneous response to changes in fixed costs, schedule flexibility, and restrictions on weekly hours. Fixed costs of work affect response to each policy and determine associated losses.

Suggested Citation

  • Castex, Gonzalo & Dechter, Evgenia, 2018. "A model of labor supply, fixed costs and work schedules," Journal of Monetary Economics, Elsevier, vol. 95(C), pages 32-48.
  • Handle: RePEc:eee:moneco:v:95:y:2018:i:c:p:32-48
    DOI: 10.1016/j.jmoneco.2018.02.002
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    More about this item

    Keywords

    Labor supply; Work schedule; Work flexibility; Fixed costs of work;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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