Maximilian Blömer - Recent Trends in Labour Supply Elasticities in Germany

• Presenting author: Maximilian Blömer (ifo Center for Macroeconomics and Surveys)

• Authors: Maximilian J. Blömer

• Session: C03B - Behavior [2] - Wednesday 14:00-15:30 - Marietta-Blau Hall

In order to analyse recent trends in labour supply in Germany, I estimate a static discrete choice model of unitary household labour supply for each year 1998 to 2018. I find that the own-wage labour supply elasticities implied by the models have increased over the last two decades, especially for couples around the turn of the century and for single males. While females became less sensitive to their partner’s wage, the responsiveness of males to the partner’s wage slightly increased. In a decomposition analysis, using counterfactual model-data combinations, I find that compositional changes in demographics play only a minor role in the shift in males’ own- and cross-wage elasticities, since most of the change in elasticities is driven by preferences or labour market restrictions. For females, changes in composition play a bigger role in the rise of elasticities.