Korea Development Institute
Institutional Affiliation: Korea Development Institute
NBER Working Papers and Publications
|September 2018||Individual and Aggregate Labor Supply in Heterogeneous Agent Economies with Intensive and Extensive Margins|
with Yongsung Chang, Sun-Bin Kim, Richard Rogerson: w24985
We study business cycle fluctuations in heterogeneous-agent general equilibrium models that feature both intensive and extensive margins of labor supply. A nonconvexity in the mapping between time devoted to work and labor services combined with idiosyncratic shocks generates operative extensive and intensive margins. We consider calibrated versions of this model that differ in the value of a key preference parameter for labor supply and the extent of heterogeneity. The model is able to capture the salient features of the empirical distribution of hours worked, including how individuals transit within this distribution. We then study how the various specifications influence labor supply responses to aggregate technology shocks. We ask to what extent our predictions for business cycle fluct...