Estimating Labor Supply Elasticities with Joint Borrowing Constraints of Couples

• 成果类型: Article
• 署名作者: Bredemeier, Christian; Gravert, Jan; Juessen, Falko
• 署名单位: University of Cologne; IZA Institute Labor Economics; University of Wuppertal; IZA Institute Labor Economics
• 刊物名称: JOURNAL OF LABOR ECONOMICS
• ISSN/ISSBN: 0734-306X
• DOI: 10.1086/703148
• 发表日期: 2019
• 页码: 1215-1265
• 关键词: intertemporal substitution; consumption inequality; income taxation; MODEL; earnings; taxes; micro; RISK

摘要

Conventional estimates of Frisch labor supply elasticities are biased in the presence of borrowing constraints. We develop an incomplete-markets model with two-earner households and derive a new estimation approach for the Frisch elasticity that yields unbiased estimates even in samples that include borrowing-constrained households. Our approach exploits that the strength of the estimation bias depends on individuals' relative contribution to household earnings. It takes the form of a simple interaction term model with minimum data requirements. Using Panel Study of Income Dynamics data, we estimate Frisch elasticities of about 0.7 for men and rather homogeneous Frisch elasticities across the population.