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Labor Supply of Married Females in Estonia

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  • Boriss Siliverstovs
  • Dmitri Koulikov

Abstract

In this paper we estimate the labor supply function for married females in Estonia. Particularly, we are interested in determining the elasticities of the weekly supply of hours with respect to hourly wage rates and with respect to nonlabor income. We adopt the two-step estimation procedure. In the first step, we obtain parameter estimates of the self-selection corrected wage equation. At this stage, we document the absence of the sample selection bias in our data as well as the significant negative effect of nonproficiency in the Estonian language on the hourly wage rate. In the second step, the labor supply function is estimated using the Tobit model, where the predictions from the wage equation substitute for the market wage rates for all individuals. We find that the wage elasticity of hours supplied per week is positive (0.53), while at the same time the nonlabor income effect is insignificant.

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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 321.

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Length: 22 p.
Date of creation: 2003
Date of revision:
Handle: RePEc:diw:diwwpp:dp321

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Keywords: Female Labor Supply; Transition Economics; Estonian Labor Market;

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References

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  1. Maria Fraga O. Martins, 2001. "Parametric and semiparametric estimation of sample selection models: an empirical application to the female labour force in Portugal," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(1), pages 23-39.
  2. Francis Vella, 1998. "Estimating Models with Sample Selection Bias: A Survey," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 127-169.
  3. Melenberg, B. & Van Soest, A., 1993. "Semi-Parametric Estimation on the Sample Selection Model," Papers 9334, Tilburg - Center for Economic Research.
  4. Wales, T J & Woodland, A D, 1980. "Sample Selectivity and the Estimation of Labor Supply Functions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(2), pages 437-68, June.
  5. Mroz, Thomas A, 1987. "The Sensitivity of an Empirical Model of Married Women's Hours of Work to Economic and Statistical Assumptions," Econometrica, Econometric Society, vol. 55(4), pages 765-99, July.
  6. Richard Blundell & Thomas MaCurdy, 1998. "Labour supply: a review of alternative approaches," IFS Working Papers W98/18, Institute for Fiscal Studies.
  7. Tito Boeri, 1999. "Transition with Labour Supply," William Davidson Institute Working Papers Series 274, William Davidson Institute at the University of Michigan.
  8. Catherine Saget, 1999. "The determinants of female labour supply in Hungary," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(3), pages 575-591, November.
  9. Tim Callan & Arthur Van Soest, 1996. "Family Labour Supply and Taxes in Ireland," Papers WP078, Economic and Social Research Institute (ESRI).
  10. Blundell, Richard & Ham, John & Meghir, Costas, 1987. "Unemployment and Female Labour Supply," Economic Journal, Royal Economic Society, vol. 97(388a), pages 44-64, Supplemen.
  11. Michael Gerfin, 1993. "Parametric and Semiparametric Estimation of the Binary Response Model of Labor Market Participation," Diskussionsschriften dp9315, Universitaet Bern, Departement Volkswirtschaft.
  12. James Tobin, 1956. "Estimation of Relationships for Limited Dependent Variables," Cowles Foundation Discussion Papers 3R, Cowles Foundation for Research in Economics, Yale University.
  13. Charles Kroncke & Kenneth Smith, 1999. "The wage effects of ethnicity in Estonia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(1), pages 179-199, March.
  14. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  15. Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-94, July.
  16. Cogan, John F, 1981. "Fixed Costs and Labor Supply," Econometrica, Econometric Society, vol. 49(4), pages 945-63, June.
  17. Heckman, James J, 1993. "What Has Been Learned about Labor Supply in the Past Twenty Years?," American Economic Review, American Economic Association, vol. 83(2), pages 116-21, May.
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Cited by:
  1. Mikek, Peter, 2008. "Alternative monetary policies and fiscal regime in new EU members," Economic Systems, Elsevier, vol. 32(4), pages 335-353, December.
  2. Karsten Staehr, 2008. "Estimates of employment and welfare effects of personal labour income taxation in a flat-tax country : The case of Estonia," Bank of Estonia Working Papers 2008-03, Bank of Estonia, revised 30 Oct 2008.

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