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Labour Supply: The Roles of Human Capital and The Extensive Margin

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  • Michael P. Keane
  • Nada Wasi

Abstract

In this paper we specify and estimate a life-cycle labour supply model that expands on earlier work by simultaneously including human capital accumulation, saving and bequests, an active extensive margin, a realistic specification of the Social Security system, an accounting for private pensions and health expenditures, and a realistic specification of the progressive tax structure. By accounting for all these features, we develop new insights into how taxes affect life-cycle labour supply. For instance, we find that labour supply elasticities vary in important ways with age, education and the tax structure itself. We also show how human capital affects elasticities on the intensive vs. extensive margins.
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  • Michael P. Keane & Nada Wasi, 2016. "Labour Supply: The Roles of Human Capital and The Extensive Margin," Economic Journal, Royal Economic Society, vol. 0(592), pages 578-617, May.
  • Handle: RePEc:wly:econjl:v::y:2016:i:592:p:578-617
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    File URL: http://hdl.handle.net/10.1111/ecoj.2016.126.issue-592
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    Cited by:

    1. Fedor Iskhakov & Michael Keane, 2018. "Effects of Taxes and Safety Net Pensions on life-cycle Labor Supply, Savings and Human Capital: the Case of Australia," ANU Working Papers in Economics and Econometrics 2018-661, Australian National University, College of Business and Economics, School of Economics.
    2. repec:eee:hapoch:v1_713 is not listed on IDEAS

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