If you manage to get a labor economist and a macroeconomist to talk to each other, invariably the conversation will turn to the fact that macroeconomists use a Frisch elasticity of labor supply that is much too high to what microeconomic labor studies seem to reveal. And both will absolutely stand their ground and treat the other with disdain. This mutual frustration has gone for a long time as it has been extremely difficult to reconcile micro and macro estimates. One solution to this is to accept that they are going to be different, even when estimated wit the same dataset (see previous post). But that does not seem to have settled the debate.
William Peterman points out that microeconomic estimates are usually drawn from a sample of white married male heads of household. These are probably the least flexible in the labor force, so you should not be surprised that their working hours are little affected by wage changes. It is a different story for females and dependents, and once you include them in the sample, voilà you have the typical macro estimate of the elasticity, especially when the extensive margin (work or not work) is taken account of. In other words, macro and micro labor people are not talking about the same elasticity, so no wonder they are not getting the same estimates.
William Peterman points out that microeconomic estimates are usually drawn from a sample of white married male heads of household. These are probably the least flexible in the labor force, so you should not be surprised that their working hours are little affected by wage changes. It is a different story for females and dependents, and once you include them in the sample, voilà you have the typical macro estimate of the elasticity, especially when the extensive margin (work or not work) is taken account of. In other words, macro and micro labor people are not talking about the same elasticity, so no wonder they are not getting the same estimates.
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