From individual to aggregate labor supply: A quantitative analysis based on a heterogeneous agent macroeconomy

Yongsung Chang, Sun Bin Kim

Research output: Contribution to journalReview article

86 Citations (Scopus)

Abstract

At the aggregate level, the labor-supply elasticity depends on the reservation-wage distribution. We present a model economy where workforce heterogeneity stems from idiosyncratic productivity shocks. The model economy exhibits the cross-sectional earnings and wealth distributions that are comparable to those in the micro data. We find that the aggregate labor-supply elasticity of such an economy is around 1, greater than a typical micro estimate.

Original languageEnglish
Pages (from-to)1-27
Number of pages27
JournalInternational Economic Review
Volume47
Issue number1
DOIs
Publication statusPublished - 2006 Feb 1

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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