Individual and Aggregate Labor Supply With Coordinated Working Times
I analyze two extensions to the standard model of life cycle labor supply that feature operative choices along both the intensive and extensive margin. The first assumes that individuals face different continuous wage-hours schedules. The second assumes that all work must be coordinated across individuals. These models look similar qualitatively but have very different implications for how aggregate labor supply responds to changes in taxes. In the first model, curvature in the utility from leisure function plays relatively little role in determining the overall change in hours worked, whereas in the second model it is of first order importance. The second model has important implications for what data is best able to provide evidence on the extent of curvature in the utility from leisure function.
This paper was prepared for the JMCB-SNB-UniBern Conference on The Dialogue Between Micro- and Macroeconomics. I thank the conference participants, two anonymous referees, Flavio Cunha, Victor Rios-Rull, seminar participants at Yonsei University and Sogang University and participants at the conference on Structural Models of the Labor Market (Denmark, 2009) for comments. I also thank the NSF and the Korean Science Foundation (WCU-R33-10005) for financial support. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
Richard Rogerson, 2011. "Individual and Aggregate Labor Supply with Coordinated Working Times," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43, pages 7-37, 08. citation courtesy of