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Frisch elasticity of labor supply

The Frisch elasticity of labor supply captures the elasticity of hours worked to the wage rate, given a constant marginal utility of wealth. In other words, the Frisch elasticity measures the substitution effect of a change in the wage rate on labor supply.[1]

It is named after the economist Ragnar Frisch.

Under certain circumstances, a constant marginal utility of wealth implies a constant marginal utility of consumption.

See also


  1. ^ Heer, Burkhard; Alfred Maussner (2005). Dynamic General Equilibrium Modelling. Springer. p. 192. ISBN 3-540-22095-X. 
  • Frisch, Ragnar (1932). New Methods of Measuring Marginal Utility. Tübingen: Mohr. 
  • Frisch, Ragnar (1959). "A complete scheme for computing all direct and cross demand elasticities in a model with many sectors". Econometrica 27 (2): 177–196. JSTOR 1909441. 
  • Chetty, Raj; Guren, Adam; Manoli, Day; Weber, Andrea (2011). "Are Micro and Macro Labor Supply Elasticities Consistent? A Review of Evidence on the Intensive and Extensive Margins". American Economic Review 101 (3): 471–75. doi:10.1257/aer.101.3.471. 
  • Kimball, Miles S.; Shapiro, Matthew D. (July 2008). "Labor Supply: Are the Income and Substitution Effects Both Large or Both Small?". NBER Working Paper No. 14208. doi:10.3386/w14208. 
  • Shimer, Robert (2010). Labor Markets and Business Cycles. Princeton University Press. pp. 1–19. ISBN 978-1-4008-3523-2. 

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