SummaryCh04 - S u m m ar y As individuals age, there are...

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Summary • As individuals age, there are several systematic pat- terns in their labour supply—withdrawing to have children, and eventually retiring from the labour force—that require modifications of the static labour supply model developed in Chapter 2. • Interpretation of the cross-section correlation between age and labour force status as represent- ing the “pure”effect of age is problematic, especial- ly for women.This arises because of cohort effects, or the difficulty of separating out “age” from “vin- tage” (or year of birth) at a single point in time. Specifically for women, the age-participation pro- files have been shifting upward over time, as each subsequent cohort of women is more attached to the labour market than previous ones. • Incorporating individual decisions to work in one time period versus another involves a straightfor- ward extension of the static labour supply model.
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