The Evolution of the Wage Elasticity of Labor Supply over Time

The uncompensatedwage elasticity of labor supply is a fundamental parameter in economics.Despite its central role, few papers have studied directly how it has changedover time. We examine the evolution of this elasticity over the last fourdecades. We find robust evidence that the elasticity weakly increased between2000 and 2020, representing a striking reversal from the sizable declines forsingle and married women between 1979 and 2000. We additionally find that thesechanges mostly arose on the extensive margin. Using our model, we conduct aseries of counterfactual simulations to identify the factors responsible forthese trends.