Labor Supply in the Past, Present, and Future: A Balanced-Growth Perspective

Timo Boppart and Per Krusell

Journal of Political Economy, 2020, vol. 128, issue 1, 118 - 157

Abstract: The absence of a trend in hours worked in the postwar United States is an exception: across countries and historically, hours fall steadily by a little below 0.5% per year. Are steadily falling hours consistent with a stable utility function over consumption and leisure under balanced growth of the macroeconomic aggregates? Yes. We fully characterize the class of such functions and thus generalize the well-known “balanced-growth preferences” that demand constant (as opposed to falling) long-run hours. Key to falling hours is an income effect (of steady productivity growth on hours) that slightly outweighs the substitution effect.

Date: 2020
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Related works:
Working Paper: Labor supply in the past, present, and future: a balanced-growth perspective (2016)
Working Paper: Labor Supply in the Past, Present, and Future: a Balanced-Growth Perspective (2016)
Working Paper: Labor supply in the past, present, and future: a balanced-growth perspective (2016)
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