Estimates of labor supply elasticities can be sensitive to the source of identifying variation. This paper's model of production complementarities helps to interpret conflicting evidence. Complementarities attenuate working time adjustments to idiosyncratic, or individual-specific, variation in...

There is substantial variation in working time even within employer-employee matches, and yet estimates of the Frisch elasticity of labor supply can be near zero. This paper proposes a tractable theory of earnings and working time to interpret these observations. Production complementarities...