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ASSETS, SAVINGS AND LABOR SUPPLY
Author(s) -
SMITH JAMES P.
Publication year - 1977
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1977.tb01117.x
Subject(s) - economics , wage , work (physics) , measure (data warehouse) , labour economics , econometrics , supply , microeconomics , computer science , mechanical engineering , database , engineering
This paper examines the role of assets in labor supply functions. Although assets have frequently been used to measure the response of hours worked to non wage‐related income, it is generally incorrect to include them in a labor supply equation. Using a simple life cycle model, working hours and assets are shown to be simultaneously determined by similar economic forces. Therefore, the correlation between them should not be accepted as evidence of a causal sequence from assets to market work. An empirical test of the life cycle implications for savings behavior is performed using data from the Survey of Economic Opportunity.