Using Labor Supply Elasticities to Learn about Income Inequality : The Role of Productivities versus Preferences

This paper argues that labor supply elasticities encode information about the determinants of income inequality. In the theoretical framework, individuals choose labor supply conditional on productivities and preferences for consumption relative to...

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Main Authors:	Bergstrom, Katy, Dodds, William
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2020
Subjects:	LABOR PRODUCTIVITY LABOR SUPPLY ELASTICITY INCOME INEQUALITY PREFERENCE
Online Access:	http://documents.worldbank.org/curated/en/764311578322352997/Using-Labor-Supply-Elasticities-to-Learn-about-Income-Inequality-The-Role-of-Productivities-versus-Preferences http://hdl.handle.net/10986/33151

id	okr-10986-33151
recordtype	oai_dc
spelling	okr-10986-331512022-09-20T00:13:14Z Using Labor Supply Elasticities to Learn about Income Inequality : The Role of Productivities versus Preferences Bergstrom, Katy Dodds, William LABOR PRODUCTIVITY LABOR SUPPLY ELASTICITY INCOME INEQUALITY PREFERENCE This paper argues that labor supply elasticities encode information about the determinants of income inequality. In the theoretical framework, individuals choose labor supply conditional on productivities and preferences for consumption relative to leisure. The paper shows that reduced-form labor supply elasticities allow one to isolate the components of income due to productivities versus preferences. The paper then investigates what labor supply elasticities imply about the importance of productivities versus preferences in the United States. Estimates from the literature imply productivities drive most of income inequality. Larger income effects and larger differences between income and hours worked elasticities imply preferences play an increasingly important role. 2020-01-09T15:49:08Z 2020-01-09T15:49:08Z 2020-01 Working Paper http://documents.worldbank.org/curated/en/764311578322352997/Using-Labor-Supply-Elasticities-to-Learn-about-Income-Inequality-The-Role-of-Productivities-versus-Preferences http://hdl.handle.net/10986/33151 English Policy Research Working Paper;No. 9102 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper United States
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	LABOR PRODUCTIVITY LABOR SUPPLY ELASTICITY INCOME INEQUALITY PREFERENCE
spellingShingle	LABOR PRODUCTIVITY LABOR SUPPLY ELASTICITY INCOME INEQUALITY PREFERENCE Bergstrom, Katy Dodds, William Using Labor Supply Elasticities to Learn about Income Inequality : The Role of Productivities versus Preferences
geographic_facet	United States
relation	Policy Research Working Paper;No. 9102
description	This paper argues that labor supply elasticities encode information about the determinants of income inequality. In the theoretical framework, individuals choose labor supply conditional on productivities and preferences for consumption relative to leisure. The paper shows that reduced-form labor supply elasticities allow one to isolate the components of income due to productivities versus preferences. The paper then investigates what labor supply elasticities imply about the importance of productivities versus preferences in the United States. Estimates from the literature imply productivities drive most of income inequality. Larger income effects and larger differences between income and hours worked elasticities imply preferences play an increasingly important role.
format	Working Paper
author	Bergstrom, Katy Dodds, William
author_facet	Bergstrom, Katy Dodds, William
author_sort	Bergstrom, Katy
title	Using Labor Supply Elasticities to Learn about Income Inequality : The Role of Productivities versus Preferences
title_short	Using Labor Supply Elasticities to Learn about Income Inequality : The Role of Productivities versus Preferences
title_full	Using Labor Supply Elasticities to Learn about Income Inequality : The Role of Productivities versus Preferences
title_fullStr	Using Labor Supply Elasticities to Learn about Income Inequality : The Role of Productivities versus Preferences
title_full_unstemmed	Using Labor Supply Elasticities to Learn about Income Inequality : The Role of Productivities versus Preferences
title_sort	using labor supply elasticities to learn about income inequality : the role of productivities versus preferences
publisher	World Bank, Washington, DC
publishDate	2020
url	http://documents.worldbank.org/curated/en/764311578322352997/Using-Labor-Supply-Elasticities-to-Learn-about-Income-Inequality-The-Role-of-Productivities-versus-Preferences http://hdl.handle.net/10986/33151
_version_	1764478100269170688

Using Labor Supply Elasticities to Learn about Income Inequality : The Role of Productivities versus Preferences

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