Individual and Aggregate Labor Supply with Coordinated Working Times

August 2011
Journal of Money, Credit and Banking, Vol. 43, Issue Supplement s1

I analyze two extensions to the standard model of life-cycle labor supply that feature operative choices along both the intensive and extensive margin. One assumes that individuals face continuous wage-hours schedules, while the other assumes that all work must be coordinated across individuals. Though similar qualitatively, the two models have very different implications for aggregate labor supply responses to tax policy. In the first model, curvature in the individual utility from leisure function plays relatively little role, but in the second model, it is of first-order importance. The second model also has important implications for what data are best able to provide evidence on the extent of curvature in the utility from leisure function.