Labor Supply within the Firm

Michele Battisti (), Ryan Michaels and Choonsung Park
Additional contact information
Michele Battisti: University of Glasgow
Ryan Michaels: Federal Reserve Bank of Philadelphia
Choonsung Park: Korea Institute of Finance

No 16414, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: There is substantial variation in working time even within employer-employee matches, and yet estimates of the Frisch elasticity of labor supply can be near zero. This paper proposes a tractable theory of earnings and working time to interpret these observations. Production complementarities attenuate the response of working time to idiosyncratic, or worker-specific, shocks, but…firm-wide shocks are mediated by preference parameters. The model can be identified using…firm-worker matched data, revealing a Frisch elasticity of around 0.5. A quasi-experimental approach that exploits only idiosyncratic variation would find an elasticity less than half this.

Keywords: Frisch elasticity; production complementarities; labour supply (search for similar items in EconPapers)
JEL-codes: J22 J31 (search for similar items in EconPapers)
Pages: 114 pages
Date: 2023-08
New Economics Papers: this item is included in nep-lma
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Citations: View citations in EconPapers (2)

Published - published in: Journal of Labor Economics, 2024, 42 (2), 511 - 548

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