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 mimics the design of earlier studies by exploiting only idiosyncratic variation would find an elasticity less than half this.
View the Full Working Paper![Coworkers sitting around a meeting table.](/-/media/frbp/assets/images/content/the-economy/the-economy/laborsupply/subsectionbanner-laborsupply.jpg)
Working Paper
Labor Supply Within the Firm
July 2020
WP 20-27 - 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.
Share
Download