CBO's projections of the labor force

Original publisher: [Washington, D.C.] : Congress of the U.S., Congressional Budget Office, [2004] OCLC Number: (OCoLC)56989454 (OCoLC)56596910 Subject: Labor supply -- United States -- Statistics. Excerpt: ... CBO'S PROJECTIONS OF THE LABOR FORCE 9 11 labor force. The model allowed for the elasticity of sup-should have been a substantial increase in the labor force ply for primary earners to vary on the basis of their posi-participation rate between 2000 and 2003. Because par-tion in the earnings distribution, with elasticities ranging ticipation actually fell during that period, however, CBO from 0.03 for those in the top 40 percent of the earnings adjusted downward its projections of the labor force be-distribution to 0.17 for those in the bottom decile of that tween 2004 and 2006. Some recent evidence suggests 12 distribution. That model would imply that there that the labor supply response to changes in after-tax wage rates might be smaller than in the past, particularly 11. The elasticity of supply is defined as the percentage change in among married women, although that has not yet be-labor supply in response to a 1 percent change in the after-tax 13 wage rate. These estimated elasticities represent the midpoint of come a consensus view. CBO continues to investigate estimated empirical ranges reported in Congressional Budget that issue. Office, Labor Supply and Taxes ( July 1996 ). 12. The elasticities for primary earners are based on results reported in 13. Bradley T. Heim, " The Incredible Shrinking Elasticities: Married Chinhui Juhn, Kevin M. Murphy, and Robert H. Topel, " Current Female Labor Supply, 1979-2003 " ( draft, Duke University, Employment, Historically Contemplated, " Brookings Papers on June 2004 ), available at www.econ.duke.edu / ~ bheim / files / Economic Activity, no. 1 ( 2002 ), pp. 79-136. HeimFemLS.pdf.