Dissertation

Table 3.14: Decomposing the labor supply responses under capital’s share of α = 0.3.

(a) The intensive margin: average weekly hours spent on market work between ages 25-55.

Experiment ϕ = 0.16 ϕ = 0.37 ϕ = 0.58 ϕ = 0.79 ϕ = 1 Baseline 29.34 33.85 35.08 35.65 35.99 1 28.54 33.68 35.09 35.75 36.13
2 28.42 33.81 35.3 35.99 36.39
3 28.41 33.9 35.41 36.12 36.53

(b) The extensive margin: actual retirement age. Experiment ϕ = 0.16 ϕ = 0.37 ϕ = 0.58 ϕ = 0.79 ϕ = 1

Baseline 62.75 64.47 64.94 65.15 65.26

1 65.4 66.64 66.91 67.03 67.1 2 66.5 67.45 67.68 67.79 67.85 3 67.33 68.13 68.34 68.43 68.48

values also reveals a familiar pattern. To see this, consider Table 3.14, in which I report both

the average weekly hours spent in market work between ages 25-55 (the intensive margin),

as well as the ages at which households exit the labor force (the extensive margin) under a

capital’s share of α = 0.3. Note that similar to the other tables, I hold the social security

tax rate held fixed at the baseline level. The table shows that across the baseline and

experiment 3, average weekly hours spent on market work for efficiency groups 2 through

5 increases by roughly 0.16, 0.1, 1.3 and 1.5%, respectively. The only exception are the

poorest households, whose hours decline under population aging. However, the delays in

actual retirement experienced by the different efficiency groups under α = 0.3 are very

similar. Across the baseline and experiment 3, the age at which labor supply drops to zero

for the respective efficiency groups increases by 4.6, 3.7, 3.4, 3.3 and 3.2 years. Note that it is

the large delay in retirement for the poorest households that more than compensates for the

lower average hours spent on market work between ages 25-55 and generates increased labor

supply over the life-cycle. Table 3.15 reports simulation results in the same two categories,

but for α = 0.4, and shows that household labor supply responses along both the intensive

and the extensive margins are fairly robust to the underlying capital’s share parameter.

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