• Table of Contents
    • Abstract
    • Keywords
    • Article
      • 1 Setting the scene
        • 1.1 Substitution and income effects
        • 1.2 Empirical evidence
        • 1.3 Some popular labour supply specifications
      • 2 The impact of wages and income on hours of work and employment
        • 2.1 Three concepts of employment and labour supply
        • 2.2 Aggregate labour supply
      • 3 Labour supply over the life cycle
        • 3.1 Frisch (λ-constant) labour supply equations
        • 3.2 Two-stage budgeting and Marshallian labour supply equations
        • 3.3 Marginal rate of substitution equations
        • 3.4 Relationships among the life-cycle elasticities
        • 3.5 Retirement and pension incentives
      • 4 Family labour supply
        • 4.1 The unitary model of family labour supply
        • 4.2 Collective family labour supply
      • 5 Labour supply with taxation and welfare participation
        • 5.1 Discrete hours choices
        • 5.2 Fixed costs of work
        • 5.3 Missing wages
        • 5.4 Programme participation, stigma and benefit take-up
        • 5.5 Family labour supply and taxation
        • 5.6 Optimal taxation and labour supply
        • 5.7 Randomized control trials and quasi-experimental approaches
      • 6 Conclusions: which labour supply elasticities for policy evaluation?
    • See Also
    • Bibliography
    • How to cite this article

labour supply

Richard Blundell and Thomas MaCurdy
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by Steven N. Durlauf and Lawrence E. Blume
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Abstract

The analysis of labour supply is placed in a general framework within which empirical models and their resulting elasticity estimates can be interpreted. An explicitly intertemporal life-cycle structure is developed for the choice of hours and participation. The relationship between economic substitution effects found in the labour supply literature and wage impacts on different concepts of employment is considered. We provide a separate discussion of the main issues surrounding the analysis of family labour supply and the analysis of the impact of taxation. We conclude with a discussion on the interpretation of labour supply elasticities for policy analysis.
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Keywords

benefit take-up; collective models of the household; cost functions; dynamic programming; employment; Engel curve; Euler equations; Frisch specification; Hicksian effect; hours worked; indirect utility function; labour supply; linear expenditure system; Marshallian effect; optimal taxation; reservation wage; retirement; Slutsky effect; tax credits
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Article

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How to cite this article

Blundell, Richard and Thomas MaCurdy. "labour supply." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 21 May 2013 <http://www.dictionaryofeconomics.com/article?id=pde2008_L000219> doi:10.1057/9780230226203.0918

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