Essays in Labor Economics

Abstract

As Western societies age, their working-age populations are declining, resulting in a scarcity of labor. Consequently, these societies face reduced production opportunities while shouldering an increasing burden of elderly care. This leads to governments encountering rising expenditures alongside a decreasing tax base. One potential avenue to mitigate this problem is by increasing the labor supply among the working-age population. <br> In the canonical model of the labor market, an individual's labor supply is her optimal choice of working hours derived from the trade-off between consumption and leisure, given equilibrium wages and consumption prices. However, in reality, numerous institutional frictions impact labor supply as well, such as misaligned incentives, limited geographic mobility, and inadequate work-family compatibility, among others. Due to these frictions, individuals may choose to work fewer hours than what they would consider optimal when faced with a mere leisure-consumption trade-off. Hence, reducing these frictions could potentially expand the labor supply of the working-age population and, consequently, alleviate the prevailing scarcity of labor in Western societies today. This thesis consists of three independent chapters covering the causes and consequences of such frictions and how they can be eliminated with the help of policies.