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Returns to experience and the elasticity of labor supply

Scott French & Tess Stafford

Review of Economic Dynamics2026https://doi.org/10.1016/j.red.2026.101323preprint
AJG 3ABDC A*
Weight
0.50

Abstract

When wages increase with work experience, estimation of standard labor supply models that assume exogenous wage formation suffers from omitted variable bias and produces downward-biased estimates of the intertemporal elasticity of substitution (IES). We test this theory in a novel way. Using a large data set of the daily labor supply decisions of Florida fishermen, we identify a sample of highly-experienced, near-retirement fishermen, for whom the returns to experience are negligible and the standard model is a close approximation. Using this sample, we estimate an IES of 2.7, more than twice estimates that ignore the role of learning-by-doing.

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https://doi.org/https://doi.org/10.1016/j.red.2026.101323

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@article{scott2026,
  title        = {{Returns to experience and the elasticity of labor supply}},
  author       = {Scott French & Tess Stafford},
  journal      = {Review of Economic Dynamics},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1016/j.red.2026.101323},
}

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Returns to experience and the elasticity of labor supply

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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