On the role of unobserved preference heterogeneity in discrete choice models of labour supply
AbstractThe aim of this paper is to analyse the impact of unobserved preference heterogeneity in empirical applications of discrete choice models of labour supply. Typically, unobserved heterogeneity is estimated either with continuous or discrete mixture models. However, in order to avoid estimation difficulties, most of the empirical analysis assumes a relatively constrained mixture, standard examples being models where only few coefficients are allowed to vary with independent normal distributions or with discrete distributions with few mass points. We compare labour supply elasticities obtained with these typical specifications of unobserved heterogeneity with those from a more general model that we are able to estimate through an EM algorithm for the nonparametric estimation of mixed models. Results show that labour supply elasticities change significantly with respect to a basic model without unobserved heterogeneity only when the joint distribution of the varying tastes is left completely unspecified. Copyright Springer-Verlag 2013
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Bibliographic InfoArticle provided by Springer in its journal Empirical Economics.
Volume (Year): 45 (2013)
Issue (Month): 2 (October)
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Other versions of this item:
- Daniele Pacifico, 2010. "On the role of unobserved preference heterogeneity in discrete choice models of labour supply," Center for the Analysis of Public Policies (CAPP) 0071, Universita di Modena e Reggio Emilia, Dipartimento di Economia Politica.
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
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- Nathalie Picard & André de Palma & Ignacio A. Inoa, 2013.
"Discrete Choice Decision-Making with Multiple Decision Makers within the Household,"
THEMA Working Papers
2013-03, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- André De Palma & Nathalie Picard & Ignacio Inoa, 2013. "Discrete Choice Decision-Making with Multiple Decision Makers within the Household," Working Papers hal-00812835, HAL.
- Kabatek, J., 2013. "Iteration Capping For Discrete Choice Models Using the EM Algorithm," Discussion Paper 2013-019, Tilburg University, Center for Economic Research.
- Lars Kunze & Nicolai Suppa, 2013. "Job Characteristics and Labour Supply," Ruhr Economic Papers 0418, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
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