Labor Supply within the Firm

Arbeitspapier

There is substantial variation in working time even within employer-employee matches, and yet estimates of the Frisch elasticity of labor supply can be near zero. This paper proposes a tractable theory of earnings and working time to interpret these observations. Production complementarities attenuate the response of working time to idiosyncratic, or worker-specific, shocks, but firm-wide shocks are mediated by preference parameters. The model can be identified using firm-worker matched data, revealing a Frisch elasticity of around 0.5. A quasi-experimental approach that exploits only idiosyncratic variation would find an elasticity less than half this.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 16414

Classification and Topics

• Classification: Wirtschaft ; Time Allocation and Labor Supply ; Wage Level and Structure; Wage Differentials
• Subject: labour supply ; production complementarities ; Frisch elasticity

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Battisti, Michele ; Michaels, Ryan ; Park, Choonsung
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/279112
• Last update: 10.03.2025, 11:42 AM CET