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Abstract

This note studies Casey Mulligan’s empirical test of the paradox of toil. Mulligan proposes that one can test it by checking if an increase in labor supply, due to seasonal factors, reduced output in 2009. This note shows that in the context of the standard New Keynesian model this test is invalid. The note also discusses two other tests proposed by Mulligan and suggests that they do not resolve the controversy.

Citation

Eggertsson, Gauti B. “A Comment on Casey Mulligan’s Test of the Paradox of Toil.” Federal Reserve Bank of New York, May 2010.

@techreport{eggertsson_2010_paradox_toil,
  author       = {Eggertsson, Gauti B.},
  title        = {A Comment on Casey Mulligan’s Test of the Paradox of Toil},
  institution  = {Federal Reserve Bank of New York},
  year         = {2010},
  month        = {May}
}