New study reveals key to understanding U.S. labor supply dynamics
The article introduces a new way to understand how people decide whether to work or not. They use the idea of a "reservation wedge" to show how much someone's potential earnings would need to change for them to choose not to work. By looking at this concept in a large survey of U.S. households, they found that people are more likely to work when their potential earnings are higher. The study also suggests that during economic ups and downs, people's decisions about working can change a lot. This new approach helps explain why employment levels can vary so much during different economic times.