IDEAS home Printed from https://ideas.repec.org/a/ucp/jlabec/doi10.1086-703148.html

Estimating Labor Supply Elasticities with Joint Borrowing Constraints of Couples

Author

Listed:
  • Christian Bredemeier
  • Jan Gravert
  • Falko Juessen

Abstract

Conventional estimates of Frisch labor supply elasticities are biased in the presence of borrowing constraints. We develop an incomplete-markets model with two-earner households and derive a new estimation approach for the Frisch elasticity that yields unbiased estimates even in samples that include borrowing-constrained households. Our approach exploits that the strength of the estimation bias depends on individuals’ relative contribution to household earnings. It takes the form of a simple interaction term model with minimum data requirements. Using Panel Study of Income Dynamics data, we estimate Frisch elasticities of about 0.7 for men and rather homogeneous Frisch elasticities across the population.

Suggested Citation

  • Christian Bredemeier & Jan Gravert & Falko Juessen, 2019. "Estimating Labor Supply Elasticities with Joint Borrowing Constraints of Couples," Journal of Labor Economics, University of Chicago Press, vol. 37(4), pages 1215-1265.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/703148
    DOI: 10.1086/703148
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/703148
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: http://dx.doi.org/10.1086/703148
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: https://libkey.io/10.1086/703148?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Antonio Cutanda & Juan A. Sanchis-Llopis, 2023. "Human capital and the intertemporal substitution for leisure: empirical evidence for Spain," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 22(3), pages 377-396, September.
    2. Christian Bredemeier & Falko Juessen & Roland Winkler, 2023. "Bringing Back the Jobs Lost to Covid‐19: The Role of Fiscal Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 55(7), pages 1703-1747, October.
    3. Christian Bredemeier & Patrick Ndlovu & Sunčica Vujić & Roland Winkler, 2025. "Household decisions and the gender gap in job satisfaction," Scottish Journal of Political Economy, Scottish Economic Society, vol. 72(1), February.
    4. Koray Aktas, 2021. "Characterizing Life-Cycle Dynamics of Annual Days of Work, Wages, and Cross-Covariances," Working Papers 465, University of Milano-Bicocca, Department of Economics.
    5. Alexander Bick & Adam Blandin & Richard Rogerson, 2022. "Hours and Wages," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(3), pages 1901-1962.
    6. Christian Bredemeier & Jan Gravert & Falko Juessen, 2023. "Accounting for Limited Commitment between Spouses when Estimating Labor-Supply," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 547-578, December.
    7. Bredemeier, Christian, 2019. "Gender Gaps in Pay and Inter-Firm Mobility," IZA Discussion Papers 12785, IZA Network @ LISER.
    8. Bahn, Dorothée & Bredemeier, Christian & Juessen, Falko, 2025. "Household chores, taxes, and the labor-supply elasticities of women and men," Ruhr Economic Papers 1177, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    9. Ali Elminejad & Tomas Havranek & Roman Horvath & Zuzana Irsova, 2023. "Intertemporal Substitution in Labor Supply: A Meta-Analysis," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 1095-1113, December.
    10. Jeong Seoyoon & Kim Won Hyeok & Shim Myungkyu, 2025. "Estimating Labor Supply Elasticities in Korea: The Role of Limited Commitment Between Spouses," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 25(2), pages 343-370.
    11. Bredemeier, Christian & Gravert, Jan & Juessen, Falko, 2021. "Accounting for Limited Commitment between Spouses When Estimating Labor-Supply Elasticities," IZA Discussion Papers 14226, IZA Network @ LISER.
    12. Antonio Cutanda & Juan A. Sanchis-Llopis, 2021. "Joint estimation of intertemporal labor and consumption decisions: evidence from Spanish households headed by working men," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 11(4), pages 611-629, December.
    13. Christian Bredemeier & Falko Juessen & Roland Winkler, 2020. "Fiscal Policy and Occupational Employment Dynamics," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(6), pages 1527-1563, September.
    14. Antonio Cutanda & Juan A. Sanchis-Llopis, 2022. "Human capital and the intertemporal substitution for leisure: empirical evidence for Spain," Working Papers 2116, Department of Applied Economics II, Universidad de Valencia.

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlabec:doi:10.1086/703148. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JOLE .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.