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022			_a0895-3309
100			_aRogerson, Richard _9120021
245		0	_aWhy Labor Supply Matters for Macroeconomics
260			_bJournal of Economic Perspectives
260			_c2024
300			_a137-158
520			_aBenchmark models taught in undergraduate macro do not attribute any role for labor supply as an important determinant of macroeconomic outcomes. The first part of this paper documents three facts. First, differences in hours of work across OECD economies are large and imply large differences in GDP per capita. Second, there are large differences in the size of tax and transfer programs across countries, as proxied by differences in government revenues relative to the GDP. Third, these two outcomes are strongly negatively correlated. Taken together, these facts suggest an important role for labor supply in affecting macroeconomic outcomes. I conjecture that the reason why macro textbooks do not include a discussion of labor supply stems from a belief that labor supply elasticities are sufficiently small that even large differences in work incentives do not generate important macroeconomic effects. The second part of this paper argues that this belief is based on incorrect inference linking small elasticities for prime age male to small aggregate labor supply elasticities. The role of labor supply at the extensive margin plays a critical role in understanding this mistake in this inference.
650			_a Aggregate Human Capital _9119520
650			_a Aggregate Labor Productivity, Personal Income and Other Nonbusiness Taxes and Subsidies _9120022
650			_a includes inheritance and gift taxes, Welfare, Well-Being, and Poverty: Government Programs _9120023
650			_a Intergenerational Income Distribution _9119523
650			_a Wages
650			_aUnemployment _93282
856			_uhttps://www.aeaweb.org/articles?id=10.1257/jep.38.2.137
999			_c133613 _d133613