Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279112 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16414
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
There is substantial variation in working time even within employer-employee matches, and yet estimates of the Frisch elasticity of labor supply can be near zero. This paper proposes a tractable theory of earnings and working time to interpret these observations. Production complementarities attenuate the response of working time to idiosyncratic, or worker-specific, shocks, but firm-wide shocks are mediated by preference parameters. The model can be identified using firm-worker matched data, revealing a Frisch elasticity of around 0.5. A quasi-experimental approach that exploits only idiosyncratic variation would find an elasticity less than half this.
Subjects: 
labour supply
production complementarities
Frisch elasticity
JEL: 
J22
J31
Document Type: 
Working Paper

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