Extensive vs. Intensive Margins

Finally looked up intensive vs. extensive margins, which I’ve been able to decipher based on context, but for which I haven’t known the formal definitions.

Extensive margin: how many units/resources are used at the margin

Intensive margin: how “hard” (or “intensely”) resources are used at the margin (“how much per unit”)

For example, a policy change to increase teacher salary and set a portion of that increase as pay-for-performance might work a) at the extensive margin to increase the number of teachers (likely in the long-run, as teaching is viewed as a more attractive profession), and b) at the intensive margin, by increasing the effort put in by existing professors to achieve high performance (in this case, more of a short-term effect).

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Hannah Blackburn

Hannah Blackburn is a Research Associate at UCSD with JPAL's Payments and Governance Research Group, under Professors Paul Niehaus and Karthik Muralidharan.

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