Titolo
Labor Supply Elasticities: Can Micro be Misleading for Macro?
Periodico
Ministero dell'Economia e delle Finanze. Dipartimento del Tesoro. Working paper
Anno: 2008 - Volume: 6 - Fascicolo: 4 - Pagina iniziale: 1 - Pagina finale: 26

In this paper we compare, in a fully consistent manner, micro and macro labor supply elasticities. The individual elasticity is obtained from the Panel Study of Income Dynamics (PSID). The aggregate, time-series, elasticity is estimated from the aggregation of individual units in the PSID for each year. We rely on exact aggregation of first-order conditions in a lifecycle labor supply model with home production. We find an individual elasticity of approximately 0.1, a low value that is in accordance with standard micro estimates. At the same time, we find an aggregate elasticity near 1. This result derives from a pure aggregation effect, with most of the difference due to the extensive margin. An implication of our result is that micro evidence is not always a reliable guide for calibrating aggregate macroeconomic parameters.



SICI: 1972-411X(2008)6:4<1:LSECMB>2.0.ZU;2-N
Testo completo: http://www.dt.mef.gov.it/export/sites/sitodt/modules/documenti_it/analisi_progammazione/analisi_programmazione_economico/n.-4-2008---Labor-Supply-Elasticities---Can-Micro-be-Misleading-for-Macro.pdf

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