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Employment and Labor Markets

The level of employment has a direct effect on people's well-being and the government's finances. When employment is higher, incomes and federal revenues are higher, while federal outlays for income support programs are lower. CBO analyzes the causes and consequences of unemployment, the effects of the unemployment insurance program, the impact of various policy proposals that might affect employment, and other issues concerning labor markets such as people's participation in the labor force.

Sub-Topics:

  • Federal Personnel
  • Labor Markets
  • Economic Stimulus
  • NAFTA

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related publications


  • An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022

    August 22, 2012

  • Fiscal Tightening in 2013 and Its Economic Consequences - Infographic

    August 22, 2012

  • Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output from April 2012 Through June 2012

    August 23, 2012

  • The 2012 Long-Term Budget Outlook

    June 05, 2012

  • Assessing the Short-Term Effects on Output of Changes in Federal Fiscal Policies: Working Paper 2012-08

    May 25, 2012

  • Economic Effects of Reducing the Fiscal Restraint That Is Scheduled to Occur in 2013

    May 22, 2012

  • Policies for Increasing Economic Growth and Employment in 2012 and 2013

    November 15, 2011

  • Confronting the Nation's Fiscal Policy Challenges

    September 13, 2011

  • Reducing the Deficit: Spending and Revenue Options

    March 10, 2011
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Economic Effects of Policies Contributing to Fiscal Tightening in 2013

report

November 8, 2012

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  • How the Supply of Labor Responds to Changes in Fiscal Policy

    October 25, 2012
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Review of Estimates of the Frisch Elasticity of Labor Supply: Working Paper 2012-13

working paper

October 25, 2012

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Abstract

Felix Reichling and Charles Whalen

Among the models that CBO uses to analyze the economic effects of changes in federal fiscal policy is a life-cycle growth model. That model requires an estimate of the responsiveness of the supply of labor to a one-time temporary change in after-tax compensation, which is described by the so-called Frisch elasticity. CBO incorporates into its analyses an estimate of the Frisch elasticity that ranges from 0.27 to 0.53, with a central estimate of 0.40. This paper describes how CBO derived that range from the research literature.


monthly archive

  • May 2013 (18)
  • April 2013 (14)
  • March 2013 (22)
  • February 2013 (10)
  • January 2013 (11)
  • December 2012 (4)
  • November 2012 (10)
  • October 2012 (4)
  • September 2012 (6)
  • August 2012 (5)
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How Does CBO Model the Response of Labor Supply to Changes in Tax and Spending Policies?

blog post

October 25, 2012


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  • A Review of Recent Research on Labor Supply Elasticities: Working Paper 2012-12

    October 25, 2012

  • Review of Estimates of the Frisch Elasticity of Labor Supply: Working Paper 2012-13

    October 25, 2012
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How the Supply of Labor Responds to Changes in Fiscal Policy

report

October 25, 2012

read complete document  (pdf, 172 kb)

related publications


  • How the Supply of Labor Responds to Changes in Fiscal Policy

    October 25, 2012
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A Review of Recent Research on Labor Supply Elasticities: Working Paper 2012-12

working paper

October 25, 2012

read complete document  (pdf, 341 kb)

Abstract

Robert McClelland and Shannon Mok

This paper updates a review conducted by CBO in 1996 in which the agency evaluated the academic research on the effects of changes in after-tax wages on labor supply in the U.S. economy. That review concluded that substitution elasticities were larger in absolute value than income elasticities and that the decision to work was more responsive to after-tax wages than was the choice of hours. In this update, we find that for men and single women, estimates of substitution elasticities have increased, and income elasticities still appear to be smaller in absolute value than substitution elasticities. We also find that labor supply elasticities of married women have fallen substantially in the last three decades, although they are still higher than the elasticities of men and unmarried women. Based on our review, the elasticities of broad measures of income (total income less capital gains) from tax return data are in most instances consistent with the labor supply elasticities estimated using survey data. We find little compelling evidence that high-income taxpayers have substantially higher elasticities with respect to their labor input than other taxpayers: While some studies have estimated higher elasticities of broad income among high-income taxpayers, those results appear to reflect those taxpayers’ greater ability to time their income. In contrast, we find evidence that low-income workers have higher elasticities of labor supply than other workers, especially in the component of their labor response that reflects movement in and out of the workforce.


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The Taxation of Capital and Labor Through the Self-Employment Tax

report

September 27, 2012

read complete document  (pdf, 1048 kb)

monthly archive

  • May 2013 (18)
  • April 2013 (14)
  • March 2013 (22)
  • February 2013 (10)
  • January 2013 (11)
  • December 2012 (4)
  • November 2012 (10)
  • October 2012 (4)
  • September 2012 (6)
  • August 2012 (5)
  • July 2012 (11)
  • June 2012 (8)
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CBO Releases a Report on the Taxation of Capital and Labor Through the Self-Employment Tax

blog post

September 27, 2012


related publications


  • H.R. 3409, Coal Miner Employment and Domestic Energy Infrastructure Protection Act

    May 03, 2012

  • H.R. 910, Energy Tax Prevention Act of 2011

    March 30, 2011

  • H.R. 2401, Transparency in Regulatory Analysis of Impacts on the Nation Act of 2011

    July 18, 2011

  • H.R. 2273, Coal Residuals Reuse and Management Act of 2011

    August 01, 2011

  • H.R. 2018, Clean Water Cooperative Federalism Act of 2011

    June 30, 2011
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H.R. 3409, Coal Miner Employment and Domestic Energy Infrastructure Protection Act

cost estimate

September 18, 2012

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H.R. 6016, Government Employee Accountability Act

cost estimate

September 14, 2012

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H.R. 6365, National Security and Job Protection Act

cost estimate

September 12, 2012

read complete document  (pdf, 21 kb)

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