What Nonconvexities Really Say about Labor Supply Elasticities

Rogerson and Wallenius (2013) draw an incorrect inference about a labor supply elasticity at an intensive margin from premises about an option to work part time that retiring workers decline. We explain how their false inference rests on overgeneralizing outcomes from a particular example and how Rogerson and Wallenius haven’t identified an economic force beyond the two – indivisible labor and time separable preferences – that drive a high labor supply elasticity at an interior solution at an extensive margin.