Weekly employee hours, weeks worked and intertemporal substitution

We show that the representative consumer model fits the aggregate consumption and employment data well if a choice of work is allowed both at the intensive and extensive margins. The structural preference parameters recovered from the estimation of the Euler equations of the model are economically meaningful and the null hypothesis of the overidentifying restrictions implied by our model is far from being rejected. We find that the shares in preferences associated with leisure time in the weeks off and in the workweeks are quite large and about equal. Our estimates also uncover relatively large intertemporal substitution elasticities.