Hostname: page-component-cd9895bd7-dzt6s Total loading time: 0 Render date: 2024-12-18T10:56:36.919Z Has data issue: false hasContentIssue false
  • English
  • Français

The Labour Supply Curve: A Pluralist Approach to Investigate its Measurements

Published online by Cambridge University Press:  01 January 2023

Donatella Cavagnoli
Donatella Cavagnoli*
Affiliation:
University of Ballarat, Australia
Rights & Permissions [Opens in a new window]

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

The neoclassical theory of labour supply cannot unambiguously explain the decision of highly-skilled high-wage male workers to work longer and harder than their counterparts in the 1980s. We investigate the labour supply elasticities of these workers, over time, and across countries, within a ceteris paribus condition. The estimates reveal a shift rather than a movement along the supply curve. We find that ambiguities are due to the absence, in the theory, of a clear distinction between a change in consumption that is partly due to changes in the wage rate and partly due to changes in purchasing power. We apply a new pluralist approach to the standard income-leisure choice framework and provide for a more systematic and consistent method of measuring variations in labour supply, with policy implications.

Keywords

J01D01H31Compensated wage elasticitycost price of leisureincome (-consumption) leisure choice frameworkreservation wageuncompensated wage elasticity
Type
Article
Information
The Economic and Labour Relations Review , Volume 23 , Issue 3 , September 2012 , pp. 71 - 87
Copyright
Copyright © The Author(s) 2012

References

Aaberge, R., Colombino, U., Strøm, S. (1999) ‘Labour supply in Italy: An empirical analysis of joint household decisions, with taxes and quantity constraints’, Journal of Applied Econometrics, 14(4), pp. 403–422.Google Scholar
ABS (Australian Bureau of Statistics) (2006) Australian Social Trends, Cat. No. 4102.0, ABS, Canberra.Google Scholar
ABS (2007) Year Book Australia, Cat. No. 1301.0, ABS, Canberra.Google Scholar
Ballard, L. C., Fullerton, D., Shoven, B. J., Whalley, J. (1985) A General Equilibrium Model for Tax Policy Evaluation, The University of Chicago Press, Chicago.Google Scholar
Becker, S. G. (1975) Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, Second edition, National Bureau of Economic Research, New York.Google Scholar
Blundell, R., MaCurdy, T. (1999) ‘Labor supply: A review of alternative approaches’ in Ashenfelter, O. C., Card, D. (eds) Handbook of Labor Economics, vol. 3A, Amsterdam, North Holland, pp. 1559–1695.Google Scholar
Card, D. (1994) ‘Intertemporal labour supply: An asssessment’ in Sims, C. (ed.) Advances in Econometrics, Cambridge University Press, Cambridge.Google Scholar
Borjas, J. G. (2005) Labor Economics, Third edition, McGraw-Hill/Irwin, Boston and London.Google Scholar
Breunig, R., Cobb-Clark, D. A., Gong, X. (2005) ‘Improving the modeling of couples’ labour supply’, Discussion Paper, 1773, The Institute for the Study of Labor (IZA).Google Scholar
Buddelmeyer, H., Creedy, J., Kalb, G. (2007) Tax Policy Design and Behavioural Micro simulation Modelling, Edward Elgar, Cheltehham.Google Scholar
Caruso, C. C., Hitchcock, E. M., Dick, R. B., Russo, J. M., Schmit, J. M. (2004) Overtime and Extended Work Shifts: Recent Findings on Illnesses, Injuries, and Health Behaviors, National Institute for Occupational Safety and Health, Cincinnati.Google Scholar
Cavagnoli, D. (2008) ‘Addiction to work: An inelastic wage elasticity of labour supply equals long hours of work’, Australian Journal of Labour Economics, 11(2), pp. 129–147.Google Scholar
Duxbury, L., Higgins, C. (2008) Work-life balance in Australia in the new millennium: Rhetoric versus reality, Report commissioned by Beaton Consulting Pty. Ltd.Google Scholar
Finnegan, A. (1962) ‘A cross-sectional analysis of hours of work’, Journal of Political Economy, 89, pp. 1059–1085.Google Scholar
Gronau, R. (1986) ‘Home production a survey’, in Ashenfelter, O., Layard, R. (eds) Handbook of Labour Economics, Elsevier Science Publishers BV, New York, Vol. 1, pp. 273–304.Google Scholar
Hamermesh, S. D., Rees, A. (1993) The Economics of Work and Pay, Fifth edition, HarperCollins, New York.Google Scholar
Hamermesh, S. D., Slemrod, B. J. (2008) ‘The economics of workaholism: We should not have worked on this paper’, The B.E. Journal of Economic Analysis, 8(1), The Berkley Electronic Press, available: http://econpapers.repec.org/article/bpjbejeap/default8.htm#v8:i1 [accessed 1 September 2012].Google Scholar
Hausman, A. J. (1985) ‘Taxes and labor supply’ in Auerbach, J., Feldstein, M. (eds) Handbook of Public Economics, Vol. 1, Elsevier, Amsterdam, pp. 213–265.Google Scholar
Keane, M. (2011) ‘Labour supply and taxes’, Journal of Economic Literature, 49(4), pp. 961–1075.Google Scholar
Keane, M., Rogerson, R. (2012) ‘Micro and macro labor supply elasticities: A reassessment of conventional wisdom’, Journal of Economic Literature, 50(2), pp. 464–476.CrossRefGoogle Scholar
Kidd, M. P., Ferko, I. (2001) ‘The employment effects of gender discrimination in Australia 1994–95’, The Economic Record, 77(236), pp. 71–88.CrossRefGoogle Scholar
Killingsworth, R. M. (1983) Labour Supply, Cambridge University Press, Cambridge.Google Scholar
Killingsworth, M. R., Heckman, J. J. (1986) ‘Female labor supply: A survey’ in Ashenfelter, O. C., Layard, R. (eds) Handbook of Labor Economics, Volume 1, Elsevier, Amsterdam, pp. 103–204.CrossRefGoogle Scholar
Moen, P., Roehling, P. V. (2005) The Career Mystique: Cracks in the American Dream, Rowman and Littlefield Publishers, Lanham MD.Google Scholar
Norris, K. (2000) Economics of Australian Labour Markets, Fifth edition, Longman, Melbourne.Google Scholar
OECD (Organisation for Economic Cooperation and Development) (1998) Employment outlook, working hours: Latest trends and policy initiatives, June, Chapter 5, available: http://www.oecd.Org/dataoecd/8/51/2080270.pdf [accessed 1 September 2012].Google Scholar
OECD (2004) Employment Outlook, ‘Recent labour market developments and prospects special focus on: Clocking in (and out): Several facets of working time’, available: http://www.oecd.org/employment/employmentpoliciesanddata/34846847.pdf [accessed 1 September 2012].Google Scholar
Sappey, R., Burgess, J., Lyons, M., Buultijens, J. (2006) Industrial Relations in Australia — Work and Workplaces, Pearson Education, Australia.Google Scholar
Schor, J. (1998) The Overspent American: Why We Want What We Don’t Need, Harper Perennial, New York.Google Scholar
Scutella, R. (1999) Labour supply estimates for married women in Australia, Melbourne Institute of Applied Economic and Social Research, Melbourne.Google Scholar
Tseng, Y. P., Wooden, M. (2005) Preferred vs. actual working hours in couple households, Working Paper Series, 7, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.Google Scholar
Triest, K. R. (1990) ‘The effect of income on taxation on labor supply in the United States’, Journal of Human Resources, 25(3), pp. 491–516.CrossRefGoogle Scholar
Van Vanrooy, B., Oxenbridge, S., Buschanan, J., Jakubauscas, M. (2007) Australia@Work: The Benchmark Report, University of Sydney.Google Scholar
Varian, R. H. (1996) Intermediate Microeconomics: A Modern Approach, Fourth edition, Norton International Student edition, W W, Norton and Co., New York.Google Scholar
Virtanen, M., Ferrie, E. J., Singh-Manoux, A., Shipley, J. M., Vahtera, J., Marmot, G. M., Kivimäki, M. (2010) ‘Overtime work and incident coronary heart disease: The Whitehall II prospective cohort study’, European Heart Journal, 31(14), pp. 1737–1744.CrossRefGoogle ScholarPubMed
Ziliak, J., Kniesner, T. (2005) ‘The effect of income taxation on consumption and labour supply’, Journal of Labor Economics, 23(4), pp. 769–796.CrossRefGoogle Scholar