WP 2012-17: The Frisch elasticity in a labor market with high job mobility
WP 2012-17: The Frisch elasticity in a labor market with high job mobility
WP 2012-17: The Frisch elasticity in a labor market with high job mobility
N°
WP 2012-17
Title
The Frisch elasticity in a labor market with high job mobility
Original title
La elasticidad de oferta laboral de Frisch en economías con alta movilidad laboral
Author(s)
Nikita Céspedes and Silvio Rendón
Language
Spanish
Date
2012/10/31
Abstract
In this paper we estimate Frisch elasticity in a labor market with high job mobility. We perform a fixed effects estimation following MaCurdy (1981) with a Heckman selection correction. The positive slope of the labor supply is identified by using instrumental variables related to changes in returns to education and experience. We use firm size as a labor demand shifter. We use data from the Permanent Employment Survey of Lima and find that Frisch elasticity is around 0.38, which indicates a relatively flexible labor market. Moreover, we find that this flexibility increases over time as well as income and hours of work.