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  8. Review of Estimates of the Frisch Elasticity of Labor Supply

Review of Estimates of the Frisch Elasticity of Labor Supply

File(s)
CBO_Estimates_of_the_Frisch_Elasticity.pdf (83.8 KB)
Permanent Link(s)
https://hdl.handle.net/1813/78121
Collections
Federal Publications
Publications of the U.S. Bureau of Labor Statistics
Author
Reichling, Felix
Whalen, Charles
Abstract

Among the models that CBO uses to analyze the economic effects of changes in federal fiscal policy is a life-cycle growth model. That model requires an estimate of the responsiveness of the supply of labor to a one-time temporary change in after-tax compensation, which is described by the so-called Frisch elasticity. CBO incorporates into its analyses an estimate of the Frisch elasticity that ranges from 0.27 to 0.53, with a central estimate of 0.40. This paper describes how CBO derived that range from the research literature.

Date Issued
2012-10-01
Keywords
Congressional Budget Office
•
CBO
•
fiscal policy
•
labor supply
•
Frisch elasticity
•
after-tax compensation
Type
government record

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