Own-wage labor supply elasticities: Variation across time and estimation methods

Artikel

There is a huge variation in the size of labor supply elasticities in the literature, which hampers policy analysis. While recent studies show that preference heterogeneity across countries explains little of this variation, we focus on two other important features: observation period and estimation method. We start with a thorough survey of existing evidence for both Western Europe and the USA, over a long period and from different empirical approaches. Then, our meta-analysis attempts to disentangle the role of time changes and estimation methods. We highlight the key role of time changes, documenting the incredible fall in labor supply elasticities since the 1980s not only for the USA but also in the EU. In contrast, we find no compelling evidence that the choice of estimation method explains variation in elasticity estimates. From our analysis, we derive important guidelines for policy simulations.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: IZA Journal of Labor Economics ; ISSN: 2193-8997 ; Volume: 5 ; Year: 2016 ; Issue: 10 ; Pages: 1-31 ; Heidelberg: Springer

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities ; Model Evaluation, Validation, and Selection ; Fiscal Policies and Behavior of Economic Agents: Household ; Time Allocation and Labor Supply
• Subject: Household labor supply ; Elasticity ; Taxation ; Europe ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bargain, Olivier ; Peichl, Andreas
• Event: Veröffentlichung
• (who): Springer
• (where): Heidelberg
• (when): 2016

Further information

• DOI: doi:10.1186/s40172-016-0050-z
• Handle: http://hdl.handle.net/10419/195034
• Last update: 10.03.2025, 11:44 AM CET