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An Empirical Model of Labor Supply in a Life Cycle Setting

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  • Thomas E. MaCurdy

Abstract

This paper formulates and estimates a structural life cycle model of labor supply. Using theoretical characterizations derived from an economic model of life cycle behavior, a two-stage empirical analysis yields estimates of intertemporal and uncompensated substitution effects which provides the information needed to predict the response of hours of work to life cycle wage growth and shifts in the lifetime wage path. The empirical model developed here provides a natural framework for interpreting estimates found in other work on this topic. It also indicates how cross section specifications of hours of work can be modified to estimate parameters relevant for describing labor supply behavior in a lifetime setting.

Suggested Citation

  • Thomas E. MaCurdy, 1980. "An Empirical Model of Labor Supply in a Life Cycle Setting," NBER Working Papers 0421, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0421
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    1. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
    2. Gilbert Ghez & Gary S. Becker, 1975. "The Allocation of Time Over the Life Cycle," NBER Chapters, in: The Allocation of Time and Goods over the Life Cycle, pages 83-132, National Bureau of Economic Research, Inc.
    3. Gilbert Ghez & Gary S. Becker, 1975. "The Allocation of Time and Goods over the Life Cycle," NBER Books, National Bureau of Economic Research, Inc, number ghez75-1.
    4. Gilbert Ghez & Gary S. Becker, 1975. "The Allocation of Goods Over the Life Cycle," NBER Chapters, in: The Allocation of Time and Goods over the Life Cycle, pages 46-82, National Bureau of Economic Research, Inc.
    5. Lucas, Robert E, Jr & Rapping, Leonard A, 1969. "Real Wages, Employment, and Inflation," Journal of Political Economy, University of Chicago Press, vol. 77(5), pages 721-754, Sept./Oct.
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    Cited by:

    1. Mohammed SHARIF, 2000. "Inverted “S”—The complete neoclassical labour-supply function," International Labour Review, International Labour Organization, vol. 139(4), pages 409-435, December.
    2. Miles S. Kimball & Robert J. Willis, 2023. "Utility and Happiness," NBER Working Papers 31707, National Bureau of Economic Research, Inc.
    3. Ajay Singh Behl, 2010. "Children and labour supply," Applied Economics Letters, Taylor & Francis Journals, vol. 17(3), pages 251-255, February.
    4. Jinjing Li & Denisa Maria Sologon, 2014. "A Continuous Labour Supply Model in Microsimulation: A Life-Cycle Modelling Approach with Heterogeneity and Uncertainty Extension," PLOS ONE, Public Library of Science, vol. 9(11), pages 1-15, November.
    5. Fu Zhiming & Wu Liang & Zhuang Ziguan, 2019. "Labor supply, income distribution, and tax progressivity in a search model," The B.E. Journal of Macroeconomics, De Gruyter, vol. 19(1), pages 1-18, January.
    6. John F. Cogaj, 1980. "Fixed Costs and Labor Supply," NBER Working Papers 0484, National Bureau of Economic Research, Inc.
    7. Martín Browning, 1993. "Dual approaches to utility," Working Papers. Serie AD 1993-10, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).

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