a column by Orazio Attanasio, Peter Levell, Hamish Low and Virginia Sánchez Marcos for VOX: CEPR’s Policy Portal
Economists disagree on the size of labour supply elasticities.
The column uses a model of female labour supply to show that there is substantial heterogeneity in both cross section and over the business cycle. It is not possible to think about labour supply elasticity as a unique structural parameter.
To understand the consequences of income tax changes, for example, we need to be explicit about whose tax is changing.
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