Working Paper: NBER ID: w3602
Authors: David Card
Abstract: The lifecycle labor supply model has been proposed as an explanation for various dimensions of labor supply, including movements over the business cycle, changes with age, and within-person variation over time. According to the model, all of these elements are tied together by a combination of intertemporal substitution effects and wealth effects. This paper offers an assessment of the model's ability to explain the main components of labor supply, focusing on microeconomic evidence for men.
Keywords: labor supply; intertemporal choice; lifecycle model
JEL Codes: J22; E24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Wage changes (J31) | Labor supply variations (J22) |
| Intertemporal substitution effects (D15) | Labor supply changes (J20) |
| Wealth effects (E21) | Labor supply changes (J20) |
| Steeper lifecycle profiles of earnings (J26) | Steeper profiles of consumption (E21) |
| Wage innovations (J33) | Labor supply decisions (J22) |
| Lifecycle labor supply model (J20) | Shape of lifecycle hours profile (C41) |