Does Labor Supply Explain Fluctuations in Average Hours Worked?

Economists have long debated over what labor supply has to do with

fluctuations in hours worked. This paper uses a time series of cross-sections

from the 1964-88 Current Population Surveys to study whether microeconomic

intertemporal substitution models can explain time series fluctuations in

annual averages. Conditional on a parametric trend, labor supply equations fit

the 1975-87 data remarkably well. But estimates for 1963-74 are not robust,

and estimated labor supply elasticities are much lower in the earlier period.

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