The Measurement of Labor Supply Using March CPS: A Cautionary Tale

Abstract

I show evidence of a systematic bias in the widely-used estimate of annual hours worked using the Current Population Survey. The bias stems from multiplying the number of weeks worked by the median – instead of the mean – weekly working hours. This bias can potentially lead to lower estimated productivity and wages, as well as lower labor supply elasticity.

Keywords: labor supply

JEL Classification: J01