Hours Volatility over the Life Cycle: The Role of Learning by Doing

We study a calibrated stochastic life cycle model and its implications for changes in the volatility of hours worked over the life cycle. In particular, we contribute to the literature to which Rios-Rull (ReStud, 1996) and Gomme, Rogerson, Rupert and Wright (NBER Macro Annual, 2004) are notable contributions. In U.S. data, the volatility of hours worked decreases with age until workers are of retirement age, at which point volatility increases. Standard models of the sort studied the papers referenced above exhibit hours volatility that increases at an earlier age. This paper determines the pattern of age-dependent labor supply elasticities that can account for the pattern of hours volatility observed in the data. Second, the paper assesses the role of learning by doing in accounting for these age-dependent elasiticities.