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Testing Whether Unemployment Represents Intertemporal Labor Supply Behavior

Author

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  • John C. Ham

    (University of Toronto and Princeton University)

Abstract

This study proposes and implements a specification test for the hypothesis that unemployment represents intertemporal labour supply behavior. The test allows for uncertainty and endogenous unemployment. Given standard specifications of the intertemporal labour supply model, I find strong evidence against this interpretation of unemployment. These results indicate the need to turn to either 1) alternative models where unemployed workers are off a supply function or ii) more complex models of intertemporal substitution.

Suggested Citation

  • John C. Ham, 1985. "Testing Whether Unemployment Represents Intertemporal Labor Supply Behavior," Working Papers 576, Princeton University, Department of Economics, Industrial Relations Section..
    • Handle: RePEc:pri:indrel:196
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    Citations

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    Cited by:

    1. Luigi Pistaferri, 2003. "Anticipated and Unanticipated Wage Changes, Wage Risk, and Intertemporal Labor Supply," Journal of Labor Economics, University of Chicago Press, vol. 21(3), pages 729-754, July.
    2. Kuroda, Sachiko & Yamamoto, Isamu, 2008. "Estimating Frisch labor supply elasticity in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 22(4), pages 566-585, December.
    3. Yannis M. Ioannides & Vassilis A. Hajivassiliou, 2007. "Unemployment and liquidity constraints," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(3), pages 479-510.
    4. Gary Solon & Robert Barsky & Jonathan A. Parker, 1994. "Measuring the Cyclicality of Real Wages: How Important is Composition Bias?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(1), pages 1-25.
    5. Altonji, Joseph G. & Martins, Ana Paula & Siow, Aloysius, 2002. "Dynamic factor models of consumption, hours and income," Research in Economics, Elsevier, vol. 56(1), pages 3-59, June.
    6. Philip Trostel & Ian Walker, 2006. "Education and Work," Education Economics, Taylor & Francis Journals, vol. 14(4), pages 377-399.
    7. Martinez-Granado, Maite, 2005. "Testing labour supply and hours constraints," Labour Economics, Elsevier, vol. 12(3), pages 321-343, June.
    8. John C. Ham & Kevin T. Reilly, 2013. "Implicit Contracts, Life Cycle Labor Supply, And Intertemporal Substitution," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54, pages 1133-1158, November.
    9. Joseph A. Ritter & Lowell J. Taylor, 1998. "Seniority-based layoffs as an incentive device," Working Papers 1998-006, Federal Reserve Bank of St. Louis.
    10. Usui, Emiko, 2009. "Wages, non-wage characteristics, and predominantly male jobs," Labour Economics, Elsevier, vol. 16(1), pages 52-63, January.
    11. Smith Conway, Karen & Kimmel, Jean, 1998. "Male labor supply estimates and the decision to moonlight," Labour Economics, Elsevier, vol. 5(2), pages 135-166, June.
    12. Peter Kuhn & Fernando Lozano, 2008. "The Expanding Workweek? Understanding Trends in Long Work Hours among U.S. Men, 1979-2006," Journal of Labor Economics, University of Chicago Press, vol. 26(2), pages 311-343, April.
    13. Roberto González & Hector Sala, 2015. "The Frisch Elasticity in the Mercosur Countries: A Pseudo-Panel Approach," Development Policy Review, Overseas Development Institute, vol. 33(1), pages 107-131, January.
    14. Emiko Usui, 2015. "Occupational gender segregation in an equilibrium search model," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-14, December.
    15. Joseph G. Altonji & Emiko Usui, 2007. "Work Hours, Wages, and Vacation Leave," ILR Review, Cornell University, ILR School, vol. 60(3), pages 408-428, April.
    16. Elizabeth Schroeder, 2016. "Dynamic labor supply adjustment with bias correction," Empirical Economics, Springer, vol. 51(4), pages 1623-1640, December.
    17. Robert B. Barsky & Gary Solon, 1989. "Real Wages Over The Business Cycle," NBER Working Papers 2888, National Bureau of Economic Research, Inc.
    18. Fréchette, Guillaume R., 2009. "Learning in a multilateral bargaining experiment," Journal of Econometrics, Elsevier, vol. 153(2), pages 183-195, December.
    19. Daniel Gordon & Lars Osberg & Shelley Phipps, 2005. "Sampling variability: some observations from a labour supply equation," Applied Economics, Taylor & Francis Journals, vol. 37(18), pages 2167-2175.
    20. Jacobs, Kris, 2000. "Estimating Nonseparable Preference Specifications for Asset Market Participants," Econometric Society World Congress 2000 Contributed Papers 1472, Econometric Society.
    21. Usui, Emiko & 臼井, 恵美子, 2012. "Gender Occupational Segregation in an Equilibrium Search Model," CIS Discussion paper series 560, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    22. H. Osano & T. Inoue, 1988. "Testing Between Competing Models of Business Cycles: The Efficient Long-Term Contract Hypothesis Versus the Intertemporal Substitution Hypothesis," Discussion Papers 768, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    23. Black, Dan A. & Kolesnikova, Natalia & Taylor, Lowell J., 2014. "Why do so few women work in New York (and so many in Minneapolis)? Labor supply of married women across US cities," Journal of Urban Economics, Elsevier, vol. 79(C), pages 59-71.

    More about this item

    Keywords

    unemployment; life-cycle; labor supply;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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