The labor-supply elasticity and borrowing constraints : Why estimates are biased

@inproceedings{Flodn2001TheLE,
  title={The labor-supply elasticity and borrowing constraints : Why estimates are biased},
  author={Martin Flod{\'e}n},
  year={2001}
}
  • Martin Flodén
  • Published 2001
The labor-supply elasticity is a central element in many macroeconomic models. We argue that assumptions underlying previous econometric estimates of the intertemporal labor supply elasticity are inconsistent with incomplete markets economies. In particular, if the econometrician ignores borrowing constraints, the elasticity will be biased downwards. Within… CONTINUE READING

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