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Intensive and Extensive Margins of Labor Supply in HANK: Aggregate and Disaggregate Implications

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  • EUNSEONG MA

Abstract

This paper studies how adjustment along intensive and extensive margins of labor supply affects aggregate and disaggregate effects of monetary policy. To this end, I develop a heterogeneous‐agent New Keynesian (HANK) economy where a nonlinear mapping from hours worked into labor services generates operative adjustment along intensive and extensive margins of labor supply. I find that monetary policy has significantly different effects on earnings inequality, depending on the extent to which margin is dominant, even if it generates similar aggregate responses.

Suggested Citation

  • Eunseong Ma, 2025. "Intensive and Extensive Margins of Labor Supply in HANK: Aggregate and Disaggregate Implications," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 57(6), pages 1657-1683, September.
    • Handle: RePEc:wly:jmoncb:v:57:y:2025:i:6:p:1657-1683
    DOI: 10.1111/jmcb.13141
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    More about this item

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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