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2018 KLEIN LECTURE: INDIVIDUAL AND AGGREGATE LABOR SUPPLY IN HETEROGENEOUS AGENT ECONOMIES WITH INTENSIVE AND EXTENSIVE MARGINS
Author(s) -
Chang Yongsung,
Kim SunBin,
Kwon Kyooho,
Rogerson Richard
Publication year - 2019
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/iere.12377
Subject(s) - margin (machine learning) , salient , economics , volatility (finance) , aggregate (composite) , business cycle , work (physics) , econometrics , macroeconomics , computer science , engineering , mechanical engineering , materials science , artificial intelligence , machine learning , composite material
We study business cycle fluctuations in heterogeneous agent general equilibrium models featuring intensive and extensive margins of labor supply. A nonlinear mapping from time devoted to work to labor services generates operative extensive and intensive margins. Our model captures the salient features of the empirical distribution of hours worked, including how individuals transit within this distribution. We study how various specifications influence labor supply responses to aggregate technology shocks and find that abstracting from intensive margin adjustment can have large effects on the volatility of aggregate hours even if fluctuations along the intensive margin are small.