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What Do Participation Fluctuations Tell Us About Labor Supply Elasticities?

Christian Haefke () and Michael Reiter ()

Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century from Verein für Socialpolitik / German Economic Association

Abstract: In this paper we use information on the cyclical variation of labor market participation to learn about the aggregate labor supply elasticity. For this purpose, we extend the standard labor market matching model to allow for endogenous participation. A model that is calibrated to replicate the variability of unemployment and participation, and the negative correlation of unemployment and GDP, implies an aggregate labor supply elasticity along the extensive margin of around 0.3 for men and 0.5 for women. This is in line with recent micro-econometric estimates.

JEL-codes: E24 E32 J21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
Date: 2012
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https://www.econstor.eu/bitstream/10419/62055/1/VfS_2012_pid_89.pdf (application/pdf)

Related works:
Working Paper: What Do Participation Fluctuations Tell Us About Labor Supply Elasticities? (2012) Downloads
Working Paper: What Do Participation Fluctuations Tell Us About Labor Supply Elasticities? (2011) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc12:62055

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