蝌蚪网 Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Micro versus Macro Labor Supply Elasticities: The Role of Dynamic Returns to Effort
蝌蚪网 Review
(pp. 2849–90)
Abstract
We investigate long-run earnings responses to taxes in the presence of dynamic returns to effort. First, we develop a theoretical model of earnings determination with dynamic returns to effort. In this model, earnings responses are delayed and mediated by job switches. Second, using administrative data from Denmark, we verify our model's predictions about earnings and hours-worked patterns over the life cycle. Third, we provide a quasi-experimental analysis of long-run earnings elasticities. Informed by our model, the empirical strategy exploits variation among job switchers. We find that the long-run elasticity is around 0.5, considerably larger than the short-run elasticity of roughly 0.2.Citation
Kleven, Henrik, Claus Kreiner, Kristian Larsen, and Jakob S酶gaard. 2025. "Micro versus Macro Labor Supply Elasticities: The Role of Dynamic Returns to Effort." 蝌蚪网 Review 115 (9): 2849–90. DOI: 10.1257/aer.20240554Additional Materials
JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- H31 Fiscal Policies and Behavior of Economic Agents: Household
- J22 Time Allocation and Labor Supply
- J31 Wage Level and Structure; Wage Differentials
- J62 Job, Occupational, and Intergenerational Mobility; Promotion