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Labor Supply with Social Interactions: Econometric Estimates and Their Tax Policy Implications


  • Grodner, Andrew

    () (East Carolina University)

  • Kniesner, Thomas J.

    () (Claremont Graduate University)


Our econometric research allows for a possible response of a person's hours worked to hours typically worked by members of a multidimensional labor market reference group that considers demographics and geographic location. Instrumental variables estimates of the canonical labor supply model expanded to permit social interactions pass a battery of specification checks and indicate positive and economically important spillovers for adult men. Ignoring or incorrectly considering social interactions in male labor supply can mis-estimate the response to tax reform by as much as 60 percent.

Suggested Citation

  • Grodner, Andrew & Kniesner, Thomas J., 2007. "Labor Supply with Social Interactions: Econometric Estimates and Their Tax Policy Implications," IZA Discussion Papers 3034, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp3034

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    Cited by:

    1. Collewet M.M.F. & Grip A. de & Koning J. de, 2015. "Conspicuous work : peer working time, labour supply, and happiness for male workers," Research Memorandum 012, Maastricht University, Graduate School of Business and Economics (GSBE).
    2. Collewet M.M.F. & Grip A. de & Koning J.d., 2015. "Peer working time, labour supply, and happiness for male workers," ROA Research Memorandum 006, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    3. Grodner, Andrew & Kniesner, Thomas J. & Bishop, John A., 2011. "Social Interactions in the Labor Market," Foundations and Trends(R) in Microeconomics, now publishers, vol. 6(4), pages 265-366, September.
    4. Eric Maurin & Julie Moschion, 2009. "The Social Multiplier and Labor Market Participation of Mothers," American Economic Journal: Applied Economics, American Economic Association, vol. 1(1), pages 251-272, January.
    5. Fabrice Etilé, 2007. "Social norms, ideal body weight and food attitudes," Health Economics, John Wiley & Sons, Ltd., vol. 16(9), pages 945-966.
    6. Bruce A. Weinberg, 2007. "Social Interactions with Endogenous Associations," NBER Working Papers 13038, National Bureau of Economic Research, Inc.

    More about this item


    labor supply; instrumental variables; reference group; social interactions; social multiplier; PSID;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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