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Nonconvexities, Retirement, and the Elasticity of Labor Supply

Author(s): Rogerson, Richard; Wallenius, Johanna

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Abstract: We consider two life cycle models of labor supply that use nonconvexities to generate retirement. In each case we derive a link between hours worked prior to retirement, the intertemporal elasticity of substitution for labor (IES), and the size of the nonconvexities. This link is robust to allowing for credit constraints and human capital accumulation by younger workers and suggests values for the IES that are .75 or higher.
Publication Date: Jun-2013
Citation: Rogerson, Richard, Wallenius, Johanna. (2013). Nonconvexities, Retirement, and the Elasticity of Labor Supply. American Economic Review, 103 (4), 1445 - 1462. doi:10.1257/aer.103.4.1445
DOI: doi:10.1257/aer.103.4.1445
ISSN: 0002-8282
Pages: 1445 - 1462
Type of Material: Journal Article
Journal/Proceeding Title: American Economic Review
Version: Final published version. Article is made available in OAR by the publisher's permission or policy.

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