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Coordinated labor Supply within the Firm: Evidence and Implications

Author

Listed:
  • Ryan Michaels

    (University of Rochester)

  • Michele Battisti

    (Ifo Institute at University of Munich)

Abstract

This paper studies individual and plant-wide adjustment in days worked. Matched firm-worker data for North-East Italy show signicant variation in mean days worked per month within plants: a one-standard deviation change amounts to about four days of worker per month. The paper then looks within the plant to document the extent of co-movement, or coordination, of labor supply among a plant's workers. After adjusting for individual and plant-specic effects, we find that the days worked of one's co-workers accounts for 20 percent of the variation in individual days worked. The effect of co-workers trumps other standard controls, such as the worker's own (daily) wage. It has been known that such an incentive to coordinate labor input can lead to downwardly-biased estimates of the labor supply elasticity if the identifying variation is idiosyncratic to a worker. Reacting to this, we study the (intensive) labor supply elasticity within the context of a model in which workers' time inputs are complements in production. This model can be estimated via minimum distance, which recovers the technology and preference parameters consistent with the observed degree of coordination and intensive-margin adjustment.

Suggested Citation

  • Ryan Michaels & Michele Battisti, 2013. "Coordinated labor Supply within the Firm: Evidence and Implications," 2013 Meeting Papers 1116, Society for Economic Dynamics.
  • Handle: RePEc:red:sed013:1116
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    File URL: https://economicdynamics.org/meetpapers/2013/paper_1116.pdf
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    References listed on IDEAS

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    6. Giannelli, Gianna Claudia & Braschi, Cristina, 2002. "Reducing Hours of Work: Does Overtime Act as a Brake Upon Employment Growth? An Analysis by Gender for the Case of Italy," IZA Discussion Papers 557, Institute for the Study of Labor (IZA).
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    9. Christopher Erickson & Andrea Ichino, 1995. "Wage Differentials in Italy: Market Forces, Institutions, and Inflation," NBER Chapters,in: Differences and Changes in Wage Structures, pages 265-306 National Bureau of Economic Research, Inc.
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    11. Richard Rogerson, 2011. "Individual and Aggregate Labor Supply with Coordinated Working Times," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43, pages 7-37, August.
    12. Dimitri G Demekas, 1994. "Labor Market Institutions and Flexibility in Italy; A Critical Evaluation and Some International Comparisons," IMF Working Papers 94/30, International Monetary Fund.
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