Department of Economics
Universidad de Cantabria
NBER Working Papers and Publications
|July 2015||Aggregating Elasticities: Intensive and Extensive Margins of Female Labour Supply|
with Orazio Attanasio, Peter Levell, Hamish Low: w21315
There is a renewed interest in the size of labour supply elasticities and the discrepancy between micro and macro estimates. Recent contributions have stressed the distinction between changes in labour supply at the extensive and the intensive margin. In this paper, we stress the importance of individual heterogeneity and aggregation problems. At the intensive margins, simple specifications that seem to fit the data give rise to non linear expressions that do not aggregate in a simple fashion. At the extensive margin, aggregate changes in participation are likely to depend on the cross sectional distribution of state variables when a shock hits and, therefore, are likely to be history dependent. We tackle these aggregation issues directly by specifying a life cycle model to explain fema...