Professional Documents
Culture Documents
Fatih Guvenen
Consumption
0 5 10 15 20 25 30 35
(cti ✓Ct 1)
1
Ui = , (7)
1
It is not clear how such large values can be reconciled with the
macro evidence mentioned above in the Lucas quote.
One way to think about it is that the labor share of GDP is about
two-thirds, so changes in labor supply matter significantly for
many macro questions, from income taxation, to business cycle
fluctuations, to response to changes in wage inequality, among
others.