Empirical Economics

, Volume 44, Issue 2, pp 661–683 | Cite as

Intertemporal labor supply and involuntary unemployment

Article

Abstract

We estimate a model of intertemporal male labor supply behavior which explicitly accounts for the effect of income taxation and the transfer system. Moreover, we model the demand-side driven rationing risk that prevents agents from choosing the optimal labor supply state. Our results show that elasticities derived in an unconstrained pure choice model are significantly higher compared to a model with involuntary unemployment. This holds true for short-run and long-run labor supply elasticities.

Keywords

Intertemporal labor supply behavior Involuntary unemployment Tax and transfer system 

JEL Classification

C23 C25 J22 J64 

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Copyright information

© Springer-Verlag 2012

Authors and Affiliations

  1. 1.DIW Berlin, FU BerlinBerlinGermany
  2. 2.University of Mannheim, DIW BerlinMannheimGermany

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