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The Elasticity of Labour Supply and Time Constraints: Why estimates are biased
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
2016 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

This paper argues that current estimates of the Frisch Labour supply elasticity are inconsistent with incomplete markets. In particular, by not accounting for time constraints the resulting estimate will include a bias. To assess this bias I apply standard econometric methods on synthetic data generated from a model with time constraints and a known value of the elasticity. The results indicate that time constraint are an important factor in estimation and in allocation of labour supply over the life cycle.

Place, publisher, year, edition, pages
2016.
Keyword [en]
Frisch labor-supply elasticity; Time constraints; Dynamic programming; Labour supply; Life cycle
National Category
Economics
Identifiers
URN: urn:nbn:se:uu:diva-296724OAI: oai:DiVA.org:uu-296724DiVA: diva2:939699
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Available from: 2016-06-20 Created: 2016-06-20 Last updated: 2016-06-20Bibliographically approved

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