Changes In Job Quality And Trends In Labor Hours

Many economic models featuring labor supply decisions, especially in macroeconomic analysis, assume away heterogeneity in the nature of work, or assume that the nature of work is irrelevant to the labor/leisure choice. This paper studies the macroeconomic implications of relaxing this assumption. Estimation from micro data using labor hours, wages, consumption, and non-pecuniary job characteristics suggests that labor supply responds to differences and to changes in the nature of work. Ceteris paribus, some job characteristics induce more labor hours than others do. Labeling the jobs that embed the labor-inducing characteristics as better quality jobs, the study estimates a Job Quality index for the aggregate U.S. economy from 1850 to 2000.