Labour Supply Flashcards
1
Q
Outline: labour supply elasticity
A
Measurement for the responsiveness of
h to changes in w
2
Q
Which effect dominates if elasticity is less than zero?
A
Income effect
3
Q
Which effect dominates if elasticity is greater than zero?
A
Substitution effect
4
Q
What is the approximate value of male labour supply?
A
-0.1 (so about a 10% increase in the wage leads, on average, to a 1% decrease in hours of work)
5
Q
Outline the ‘wages and hours of work’ over life cycle
A
1 - Increase until roughly mid-30s
2 - Remain quite constant until early-50s
3 - Decline afterwards
6
Q
Outline: Intertemporal substitution hypothesis
A
People substitute their time over the life cycle to take advantages of changes in
the price of leisure
