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Title: Wealth and Labor Supply Heterogeneity
Resulting in 1 citation.
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Mustre-Del-Rio, Jose |
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Wealth and Labor Supply Heterogeneity Review of Economic Dynamics 18,3 (July 2015): 619-634. Also: http://www.sciencedirect.com/science/article/pii/S1094202514000519 Cohort(s): NLSY79 Publisher: Society for Economic Dynamics Keyword(s): Heterogeneity; Labor Supply; Modeling; Wages; Wealth Permission to reprint the abstract has not been received from the publisher. This paper examines the importance of ex-ante heterogeneity for understanding the relationship between wealth and labor supply when markets are incomplete. An infinite horizon model is estimated where labor supply is indivisible and households are ex-ante heterogeneous in their labor disutility and market skills. The model replicates key features of the distribution of employment, wages, and wealth observed in the data. Importantly, it reverses the prediction that employment falls with wealth, a pervasive feature of models without ex-ante heterogeneity. A byproduct of the model's empirical performance is that it implies labor supply responses to unanticipated wages changes (e.g., Frisch elasticities) that are a half to two-thirds of those recovered from models with only ex-post heterogeneity. |
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Bibliography Citation
Mustre-Del-Rio, Jose. "Wealth and Labor Supply Heterogeneity." Review of Economic Dynamics 18,3 (July 2015): 619-634.
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