| Added Worker Effect | The labor force change resulting from other family members entering the labor force when the primary worker becomes unemployed or faces a wage cut. As a result, the labor force participation rate of secondary workers rises during recessions and falls during expansions.
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| Discouraged Worker Effect | The labor force change due to job seekers who wait out a recession and drop out of the labor force after becoming pessimistic about their chances of finding suitable employment during a recession. As a result, the labor force participation rate falls during recessions and increases during expansions.
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| Elasticity of Intertemporal Substitution | A measure of the responsiveness of the hours of work to changes in the wage rate. It is defined by t=(%Din hours as worker ages)/(%Din wages as worker ages).
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| Household Production Function | A production function that indicates how much household output can be produced by a family for any given allocation of time.
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| Intertemporal Substitution Hypothesis | A notion that people substitute their time over the life cycle so as to take advantage of changes in the price of leisure. Thus, a particular worker will time his leisure activities so that he enters the labor market and work more hours in those periods of the life-cycle when the wage is high.
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| Malthusian Model of Fertility | There is a positive correlation between income and fertility such that incomes are always driven back to the subsistence level. Social Security Earnings Test
A tax for retirees when they earn more than a preset maximum per year. It does not apply to workers who are 70 or older.
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