final lit review
Labor Supply and Aggregate Fluctuation in Jamaica
Jordon Barrett 1104019
Renardo Peddie 1103867
Sacha Edwards 1106491
University of Technology, Jamaica
Introduction
Issues of labor supply are at the heart of macroeconomic explanations of the large cyclical fluctuation of output observed in modern economies. The intertemporal substitution model set to examine the view that labor market is always in balance; that every observed combination of employment and compensation is a point of intersection of the relevant supply and demand curve (Alexopolus, 2004). The title of the research is the labor supply and aggregate fluctuation in Jamaica. The thesis of this paper is to test the impact of the intertemporal substitution model on labor supply and aggregate fluctuation in Jamaica. The purpose is to test how the intertemporal substitution affects various factors that contribute to a change in labor supply and aggregate fluctuation in Jamaica.
How do intertemporal substitution impact on workers and their willingness to vary their hours from one year to another?
The intertemporal substitution model is a model which states that labor supply responds positively to transitory increases in real wages and real interest rates. The main focus is on the intertemporal substitution model and how it is used to explain aggregate fluctuations. Economists have devoted substantial resources in estimating the intertemporal substitution elasticity for labor supply because this elasticity plays a crucial role in the real business cycle literature.
Lucas and Rapping (1969) modeled unemployment as a choice variable. An individual is always on his (elastic) intertemporal labor supply function and can work as much as he wants given current and future wages. Heckman (1993) stated in his equilibrium search model that shocks are explicitly incorporated into wages and provide the worker with sufficient information to make decisions on current and future labor supply. He believed
Jordon Barrett 1104019
Renardo Peddie 1103867
Sacha Edwards 1106491
University of Technology, Jamaica
Introduction
Issues of labor supply are at the heart of macroeconomic explanations of the large cyclical fluctuation of output observed in modern economies. The intertemporal substitution model set to examine the view that labor market is always in balance; that every observed combination of employment and compensation is a point of intersection of the relevant supply and demand curve (Alexopolus, 2004). The title of the research is the labor supply and aggregate fluctuation in Jamaica. The thesis of this paper is to test the impact of the intertemporal substitution model on labor supply and aggregate fluctuation in Jamaica. The purpose is to test how the intertemporal substitution affects various factors that contribute to a change in labor supply and aggregate fluctuation in Jamaica.
How do intertemporal substitution impact on workers and their willingness to vary their hours from one year to another?
The intertemporal substitution model is a model which states that labor supply responds positively to transitory increases in real wages and real interest rates. The main focus is on the intertemporal substitution model and how it is used to explain aggregate fluctuations. Economists have devoted substantial resources in estimating the intertemporal substitution elasticity for labor supply because this elasticity plays a crucial role in the real business cycle literature.
Lucas and Rapping (1969) modeled unemployment as a choice variable. An individual is always on his (elastic) intertemporal labor supply function and can work as much as he wants given current and future wages. Heckman (1993) stated in his equilibrium search model that shocks are explicitly incorporated into wages and provide the worker with sufficient information to make decisions on current and future labor supply. He believed