Abstract

http://ssrn.com/abstract=1809886
 
 

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Social Interaction in Labor Supply


Andrew Grodner


East Carolina University - Department of Economics; Syracuse University

Thomas J. Kniesner


Syracuse University - Department of Economics; Institute for the Study of Labor (IZA)

October 1, 2005

Journal of the European Economic Association, Vol. 4, No. 6, December 2006

Abstract:     
Our research examines the effect of interdependence on estimation and interpretation of earnings/labor supply equations. We consider the cases of (1) a positive spillover from others’ labor supplied and (2) a need for conformity with others’ labor supplied. Qualitative and quantitative comparative statics results with a Stone-Geary utility function demonstrate how spillover effects increase labor supply uniformly. Alternatively, conformity effects move labor supplied toward the mean of the reference group so that, in the limit, labor supply becomes perfectly inelastic at the reference group average. When there are un-modeled exogenous social interactions, conventional wage elasticities are still relatively well estimated although structural parameters may not be. Omitting endogenous social interactions may seriously misrepresent the labor supply effects of policy, however.

JEL Classification: J21, J22

Accepted Paper Series





Not Available For Download

Date posted: April 16, 2011  

Suggested Citation

Grodner, Andrew and Kniesner, Thomas J., Social Interaction in Labor Supply (October 1, 2005). Journal of the European Economic Association, Vol. 4, No. 6, December 2006. Available at SSRN: http://ssrn.com/abstract=1809886

Contact Information

Andrew Grodner
East Carolina University - Department of Economics ( email )
Brewster Building
Greenville, NC 27858
United States
2523286742 (Phone)
Syracuse University ( email )
Syracuse
New York
United States
Thomas J. Kniesner (Contact Author)
Syracuse University - Department of Economics ( email )
Syracuse, NY 13244-1020
United States
315-443-4589 (Phone)
315-443-1081 (Fax)
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
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