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UID:254830ac1ffa5f6422d0f31e9f2d7846
CATEGORIES:Seminars
CREATED:20170411T175328
SUMMARY:Lunch Seminar: Sebastian Dyrda - University of Toronto
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:Business Cycles and Household Formation. The Micro versus the Macro Labor E
 lasticity (joint with Jose Victor Rios-Rull and Greg Kaplan).\nAbstract:\nW
 e provide a new evidence on the cyclical behavior of the household size and
  labor market outcomes of young people conditional on their living arrangem
 ents in the United States from 1979 to 2010. Household size is countercycli
 al, which is mostly driven by young people moving into or delaying departur
 e from the parental home. We document that young people living with the old
  work and earn less, and their hours and wages are more volatile relative t
 o their peers living alone. We argue that living arrangements induce larger
  disparities in the labor market outcomes than age does. Motivated by these
  observations we provide a joint theory of household formation and labor ma
 rket engagement including the business cycle. We lay down a theory where yo
 ung individuals decide where to live depending on their relative wage rate,
  disutility of living with old and implicit transfers received from the old
 . We show differences in volatilities across age groups can be accounted fo
 r by incorporating household formation channel in to the real business cycl
 e model, while restricting the labor elasticity of the old to be within the
  range measured by microeconomists. We use our model to infer the implied l
 abor supply elasticities of the young and conclude young living together wi
 th the old have it 63.8% larger. Through the lens of the model we measure t
 he size of the implicit transfers concluding they account for at least 163.
 2% percent of the market consumption of the young living with the old. The 
 inclusion of people living in unstable households yields an implied aggrega
 te, or macro, Frisch elasticity that is at least around 62.7% larger than t
 he assumed micro elasticity.\n
DTSTAMP:20260406T091217Z
DTSTART:20160527T130000Z
DTEND:20160527T140000Z
SEQUENCE:0
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