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The Labour Supply Curve: A Pluralist Approach to Investigate its Measurements
Donatella Cavagnoli
Journal:

The Economic and Labour Relations Review / Volume 23 / Issue 3 / September 2012

Published online by Cambridge University Press:

01 January 2023, pp. 71-87
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The neoclassical theory of labour supply cannot unambiguously explain the decision of highly-skilled high-wage male workers to work longer and harder than their counterparts in the 1980s. We investigate the labour supply elasticities of these workers, over time, and across countries, within a ceteris paribus condition. The estimates reveal a shift rather than a movement along the supply curve. We find that ambiguities are due to the absence, in the theory, of a clear distinction between a change in consumption that is partly due to changes in the wage rate and partly due to changes in purchasing power. We apply a new pluralist approach to the standard income-leisure choice framework and provide for a more systematic and consistent method of measuring variations in labour supply, with policy implications.