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Nonparametric estimation of the impact of taxes on female labor supply

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  • Anil Kumar

Abstract

Econometric models with nonlinear budgets sets frequently arise in the study of impact of taxation on labor supply. Blomquist and Newey (2002) have suggested a nonparametric method to estimate the uncompensated wage and income effects when the budget set is nonlinear. This paper extends their nonparametric estimation method to censored dependent variables. The modified method is applied to estimate female wage and income elasticities using the 1987 PSID. I find evidence of bias if the nonlinearity in the budget set is ignored. The median compensated elasticity is estimated at 1.19 (with a standard error of 0.19).

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Bibliographic Info

Paper provided by Federal Reserve Bank of Dallas in its series Working Papers with number 05-05.

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Date of creation: 2005
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Handle: RePEc:fip:feddwp:05-05

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Keywords: Labor supply ; Women - Employment ; Wages;

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Cited by:
  1. Amanda E. Kowalski, 2012. "Estimating the Tradeoff Between Risk Protection and Moral Hazard with a Nonlinear Budget Set Model of Health Insurance," NBER Working Papers 18108, National Bureau of Economic Research, Inc.

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