The Wage Elasticity of Labour Supply: A Synthesis of Empirical Estimates

TLDR

The study conducts a meta‑analysis of empirical estimates of uncompensated labour supply elasticities. It aggregates and compares published elasticity estimates across countries and estimation methods. The analysis finds that in the Netherlands the elasticity is about 0.5 for women and 0.1 for men, men’s elasticity is relatively stable across countries while women’s varies, and that estimates are sensitive to the hours‑function specification and estimation method, implying that rising female participation may lower elasticity in the future.

Abstract

This paper performs a meta-analysis of empirical estimates of uncompensated labour supply elasticities. For the Netherlands, we find that an elasticity of 0.5 for women and 0.1 for men is a good reflection of what the literature reveals. The elasticity for men hardly differs between countries, but for women some cross-country variation is found. The increasing participation rate of women may lead to a somewhat lower elasticity in the future. Both the specification of the hours function and the estimation method are found to affect elasticity estimates.