Testing Whether Unemployment Represents Intertemporal Labor Supply Behavior

John Ham

No 576, Working Papers from Princeton University, Department of Economics, Industrial Relations Section.

Abstract: This study proposes and implements a specification test for the hypothesis that unemployment represents intertemporal labour supply behavior. The test allows for uncertainty and endogenous unemployment. Given standard specifications of the intertemporal labour supply model, I find strong evidence against this interpretation of unemployment. These results indicate the need to turn to either 1) alternative models where unemployed workers are off a supply function or ii) more complex models of intertemporal substitution.

Keywords: unemployment; life-cycle; labor supply (search for similar items in EconPapers)
JEL-codes: D02 (search for similar items in EconPapers)
Date: 1985-06
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Journal Article: Testing whether Unemployment Represents Intertemporal Labour Supply Behaviour (1986)
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Persistent link: https://EconPapers.repec.org/RePEc:pri:indrel:196

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