Labor-Market Wedge Under Engel Curve Utility : Cyclical Substitution between Necessities and Luxuries
In booms, households substitute luxuries for necessities, e.g., food away from home for food at home. Ignoring this cyclical pattern of composition changes in the consumption basket makes the labor-market wedge -- a measure of inefficiency that reflects the gap between the marginal rate of substitution and the real wage -- appear to be more volatile than it actually is. Based on the household expenditure pattern across 10 consumption categories in the Consumer Expenditure Survey, we show that taking into account these composition changes can explain 6-15% of the cyclicality in the measured labor-market wedge
Year of publication: |
2019
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Authors: | Chang, Yongsung |
Other Persons: | Hornstein, Andreas (contributor) ; Karabarbounis, Marios (contributor) |
Publisher: |
[2019]: [S.l.] : SSRN |
Subject: | Substitutionselastizität | Elasticity of substitution | Substitutionsgüter | Substitute goods | Konjunktur | Business cycle | Luxusgüter | Luxury goods | Privater Konsum | Private consumption | Konsumgüter | Consumer goods | Reallohn | Real wages | Engel-Kurve | Engel curve |
Saved in:
freely available
Extent: | 1 Online-Ressource (16 p) |
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Series: | FRB Richmond Working Paper ; No. 18-13 |
Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments 2018-07-19 erstellt |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10012898447