A model of labor supply, fixed costs and work schedules

Gonzalo Castex and Evgenia Dechter

Journal of Monetary Economics, 2018, vol. 95, issue C, 32-48

Abstract: To analyze labor supply allocations, we propose a three-dimensional labor supply framework that distinguishes between hours worked per day, days worked per week and workweeks. Individuals make labor supply choices given heterogeneous schedule-dependent fixed costs of work. The three margins are not perfect substitutes. Leisure on days not worked in a workweek has the largest weight in preferences, leisure on weeks off has the smallest weight. We use the model to analyze heterogeneous response to changes in fixed costs, schedule flexibility, and restrictions on weekly hours. Fixed costs of work affect response to each policy and determine associated losses.

Keywords: Labor supply; Work schedule; Work flexibility; Fixed costs of work (search for similar items in EconPapers)
JEL-codes: E2 H31 J22 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:95:y:2018:i:c:p:32-48

DOI: 10.1016/j.jmoneco.2018.02.002

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