TY - JOUR
T1 - Labor supply and optimization frictions: Evidence from the Danish student labor market
AU - Søgaard, Jakob Egholt
PY - 2019/5/1
Y1 - 2019/5/1
N2 - Using Danish administrative data, I investigate the magnitude and nature of optimization frictions in the labor market of Danish students. Danish students face a unique institutional setting that makes it possible to distinguish between different types of frictions and estimate their effect on individual utility. I find that frictions significantly affect observed labor market outcomes. In particular, the empirical evidence points to inattention as the dominant type of friction. In contrast, my findings appear inconsistent with real adjustment costs, price misperception and gradual learning. Overall, optimization frictions reduce the utility of individuals by approximately 2–3% of disposable income.
AB - Using Danish administrative data, I investigate the magnitude and nature of optimization frictions in the labor market of Danish students. Danish students face a unique institutional setting that makes it possible to distinguish between different types of frictions and estimate their effect on individual utility. I find that frictions significantly affect observed labor market outcomes. In particular, the empirical evidence points to inattention as the dominant type of friction. In contrast, my findings appear inconsistent with real adjustment costs, price misperception and gradual learning. Overall, optimization frictions reduce the utility of individuals by approximately 2–3% of disposable income.
KW - Bunching
KW - Inattention
KW - Labor supply
KW - Optimization frictions
KW - Student labor markets
UR - http://www.mendeley.com/research/labor-supply-optimization-frictions-evidence-danish-student-labor-market
U2 - 10.1016/j.jpubeco.2019.03.003
DO - 10.1016/j.jpubeco.2019.03.003
M3 - Journal article
SN - 0047-2727
VL - 173
SP - 125
EP - 138
JO - Journal of Public Economics
JF - Journal of Public Economics
ER -