The Accuracy of Predicted Wages of the Non-Employed and Implications for Policy Simulations from Structural Labour Supply Models
AbstractWe examine the accuracy of predicted wages for the non-employed. We argue that unemployment, marginal attachment, and not in the labour force are three distinct states. Using panel data from Australia, we test the accuracy of predicted wages for these three groups of non-employed using sample selection models. Focusing on those individuals who subsequently enter employment, we find that predictions which incorporate the estimated sample selection correction perform poorly, particularly for the marginally attached and the not in the labour force. These results have important implications for policy simulations from structural labour supply models. Copyright © 2010 Australian Treasury. Journal compilation © 2010 The Economic Society of Australia.
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Bibliographic InfoArticle provided by The Economic Society of Australia in its journal Economic Record.
Volume (Year): 86 (2010)
Issue (Month): 272 (03)
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Other versions of this item:
- Robert Breunig & Joseph Mercante, 2009. "The accuracy of predicted wages of the non-employed and implications for policy simulations from structural labour supply models," Treasury Working Papers 2009-03, Treasury, Australian Government, revised Mar 2009.
- C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
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- Xiaodong Gong & Robert Breuing & Anthony King, 2011.
"Partnered women’s labour supply and child care costs in Australia: measurement error and the child care price,"
CEPR Discussion Papers
652, Centre for Economic Policy Research, Research School of Economics, Australian National University.
- Robert Breunig & Xiaodong Gong & Anthony King, 2012. "Partnered Women's Labour Supply and Child‐Care Costs in Australia: Measurement Error and the Child‐Care Price," The Economic Record, The Economic Society of Australia, vol. 88(s1), pages 51-69, 06.
- Xiaodong Gong & Robert Breunig & Anthony King, 2011. "Partnered women's labour supply and child care costs in Australia: Measurement error and the child care price," NATSEM Working Paper Series 11/13, University of Canberra, National Centre for Social and Economic Modelling.
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