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

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  • Michael P. Keane

    () (University of Oxford and University of New South Wales)

  • Nada Wasi

    (University of Michigan, Survey Research Center)

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.

Suggested Citation

  • Michael P. Keane & Nada Wasi, 2016. "Labour Supply: the Roles of Human Capital and the Extensive Margin," Economics Papers 2016-W05, Economics Group, Nuffield College, University of Oxford.
  • Handle: RePEc:nuf:econwp:1605
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    References listed on IDEAS

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    1. Labour Supply: the Roles of Human Capital and the Extensive Margin
      by Christian Zimmermann in NEP-DGE blog on 2016-07-06 18:39:33

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