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Title: Permanent and Transitory Wage Effects in a Multi-Period Family Labor Supply Model
Resulting in 1 citation.
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Carliner, Geoffrey |
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Permanent and Transitory Wage Effects in a Multi-Period Family Labor Supply Model Working Paper, Department of Economics, University of Western Ontario, London ON, 1980 Cohort(s): Older Men Publisher: Department of Economics, University of Western Ontario Keyword(s): Dual-Career Families; Earnings, Wives; Family Income; Health/Health Status/SF-12 Scale; Labor Supply; Wages; Wives, Work Permission to reprint the abstract has not been received from the publisher. Using a subset of 680 married white men, this paper develops a model in which the household's utility depends on the level of the composite goods produced in each period with inputs of husband's and wife's home time and market goods. Given the full wealth budget constraint, two wage elasticities are derived. The elasticity of an individual's labor supply with respect to a one period change in his own wage includes substitution in consumption across periods, substitution of his home time for other inputs to household production within the period, and small wealth effect. The labor supply elasticity with respect to a permanent change in the wage in all periods includes only within period substitution and a large wealth effect. Thus the temporary elasticity is predicted to be more positive that the permanent wage elasticity, and presumably larger than zero. The other findings of this paper are a significantly negative permanent cross wage elasticity of wife's wage on husband's weekly hours, but small and insignificant effects on other measures of husband's labor supply. Health, age, and education affect labor supply directly, as well as indirectly through their effect on wage rates. Finally, persistent differences among individuals account for over one fifth of the unexplained variance in the log of weekly hours, while temporary fluctuations or measurement error account for the remaining four fifths. |
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Bibliography Citation
Carliner, Geoffrey. "Permanent and Transitory Wage Effects in a Multi-Period Family Labor Supply Model." Working Paper, Department of Economics, University of Western Ontario, London ON, 1980. |