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Author: Havranek, Tomas
Resulting in 1 citation.
1. Elminejad, Ali
Havranek, Tomas
Horvath, Roman
Irsova, Zuzana
Intertemporal Substitution in Labor Supply: A Meta-Analysis
Review of Economic Dynamics 51 (December 2023): 1095-1113.
Cohort(s): NLSY79, NLSY97
Publisher: Society for Economic Dynamics
Keyword(s): Economic Behaviors; Economic Conditions; Government Policy; Labor Force Participation; Labor Supply; Labor Supply, Elasticity of; Work Attitudes; Work Histories; Work, Willingness to

Permission to reprint the abstract has not been received from the publisher.

The intertemporal substitution (Frisch) elasticity of labor supply governs how structural models predict changes in people's willingness to work in response to changes in economic conditions or government fiscal policy. We show that the mean reported estimates of the elasticity are exaggerated due to publication bias. For both the intensive and extensive margins the literature provides over 700 estimates, with a mean of 0.5 in both cases. Correcting for publication bias and emphasizing quasi-experimental evidence reduces the mean intensive margin elasticity to 0.2 and renders the extensive margin elasticity tiny. A total hours elasticity of about 0.25 is the most consistent with empirical evidence. To trace the differences in reported elasticities to differences in estimation context, we collect 23 variables reflecting study design and employ Bayesian and frequentist model averaging to address model uncertainty. On both margins the elasticity is systematically larger for women and workers near retirement, but not enough to support a total hours elasticity above 0.5.
Bibliography Citation
Elminejad, Ali, Tomas Havranek, Roman Horvath and Zuzana Irsova. "Intertemporal Substitution in Labor Supply: A Meta-Analysis." Review of Economic Dynamics 51 (December 2023): 1095-1113.