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Household Labor Supply In Urban Areas Of Bolivia

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  • Menno Pradhan
  • Arthur Van Soest

Abstract

We analyze labor supply behavior and the choice between formal and informal sector work of the two spouses in families in urban areas of a developing country, using cross-section data from Bolivia drawn in 1989. The model generalizes the neoclassical family labor supply model. Nonmonetary returns of formal sector employment capture the fact that the choice between sectors is not exclusively based on wage differentials. Wage equations, nonmonetary returns equations, and labor supply equations are estimated jointly by smooth simulated maximum likelihood. We find substantial cross - wage elasticities of working hours of both partners, and large substitution elasticities between the two sectors. © 1997 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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Bibliographic Info

Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 79 (1997)
Issue (Month): 2 (May)
Pages: 300-310

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Handle: RePEc:tpr:restat:v:79:y:1997:i:2:p:300-310

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  1. Thomas MaCurdy & David Green & Harry Paarsch, 1990. "Assessing Empirical Approaches for Analyzing Taxes and Labor Supply," Journal of Human Resources, University of Wisconsin Press, University of Wisconsin Press, vol. 25(3), pages 415-490.
  2. Kapteyn, Arie & Kooreman, Peter & van Soest, Arthur, 1990. "Quantity Rationing and Concavity in a Flexible Household Labor Supply Model," The Review of Economics and Statistics, MIT Press, MIT Press, vol. 72(1), pages 55-62, February.
  3. Pradhan, M.P., 1993. "Sector participation in labour supply models: Preferences or rationing ?," Discussion Paper, Tilburg University, Center for Economic Research 1993-66, Tilburg University, Center for Economic Research.
  4. Pradhan, Menno & van Soest, Arthur, 1995. "Formal and informal sector employment in urban areas of Bolivia," Labour Economics, Elsevier, Elsevier, vol. 2(3), pages 275-297, September.
  5. Ransom, Michael R, 1987. "An Empirical Model of Discrete and Continuous Choice in Family Labor Supply," The Review of Economics and Statistics, MIT Press, MIT Press, vol. 69(3), pages 465-72, August.
  6. Borsch-Supan, Axel & Hajivassiliou, Vassilis A., 1993. "Smooth unbiased multivariate probability simulators for maximum likelihood estimation of limited dependent variable models," Journal of Econometrics, Elsevier, Elsevier, vol. 58(3), pages 347-368, August.
  7. Soest, A.H.O. van & Kapteyn, A.J. & Kooreman, P., 1993. "Coherency and regularity of demand systems with equality and inequality constraint," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-364384, Tilburg University.
  8. Magnac, Th, 1991. "Segmented or Competitive Labor Markets," Econometrica, Econometric Society, Econometric Society, vol. 59(1), pages 165-87, January.
  9. Laroque, Guy & Salanie, Bernard, 1989. "Estimation of Multi-market Fix-Price Models: An Application of Pseudo Maximum Likelihood Methods," Econometrica, Econometric Society, Econometric Society, vol. 57(4), pages 831-60, July.
  10. Gourieroux, Christian & Monfort, Alain, 1993. "Simulation-based inference : A survey with special reference to panel data models," Journal of Econometrics, Elsevier, Elsevier, vol. 59(1-2), pages 5-33, September.
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