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Household Labor Supply and Welfare Participation in Sweden

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Author Info
Flood, Lennart (Department of Economics, School of Economics and Commercial Law, Göteborg University)
Hansen, Jörgen () (IZA)
Wahlberg, Roger () (Department of Economics, School of Economics and Commercial Law, Göteborg University)

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Abstract

Using a sample of Swedish households, we estimate a household labor supply model assuming that preferences for consumption and leisure can be described by a direct translog utility function. The labor supply and welfare participation decisions are treated as a discrete choice problem, and we assume that these choices follow a simple conditional logit rule. In addition, we allow unobserved individual- specific effects to be correlated across alternatives. We assume that these unobserved effects are drawn from a discrete distribution, and the correlation across alternatives is modeled using factor-loading techniques. Classification error in hours is allowed for by using a multiplicative measurement error specification. The estimates from the structural model yield inelastic labor supply among husbands and positive wage elasticity for wives. Further, the cross elasticities are close to zero.

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Publisher Info
Paper provided by Göteborg University, Department of Economics in its series Working Papers in Economics with number 18.

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Length: 27 pages
Date of creation: 28 Nov 1999
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Handle: RePEc:hhs:gunwpe:0018

Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, Göteborg University Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Related research
Keywords: Labor Supply Welfare Participation Unobserved Heterogeneity Factor Loading Tax Simulation.

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Find related papers by JEL classification:
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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  1. Anna Brink & Katarina Nordblom & Roger Wahlberg, 2007. "Maximum Fee vs. Child Benefit: A Welfare Analysis of Swedish Child-Care Fee Reform," IZA Discussion Papers 2748, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Hans Fehr & Christian Habermann, 2005. "Risk Sharing and Efficiency Implications of Progressive Pension Arrangements," DNB Working Papers 064, Netherlands Central Bank, Research Department. [Downloadable!]
    Other versions:
  3. Peter Haan, 2007. "Intertemporal Labor Supply Effects of Tax Reforms," Discussion Papers of DIW Berlin 669, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  4. Flood, Lennart & Pylkkänen, Elina & Wahlberg, Roger, 2003. "From Welfare to Work: Evaluating a Proposed Tax and Benefit Reform Targeted at Single Mothers in Sweden," Working Papers in Economics 107, Göteborg University, Department of Economics. [Downloadable!]
  5. Rolf Aaberge & Ugo Colombino, 2008. "Designing Optimal Taxes with a Microeconometric Model of Household Labour Supply," CHILD Working Papers wp06_08, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY. [Downloadable!]
    Other versions:
  6. Flood, Lennart & Pylkkänen, Elina & Wahlberg, Roger, 2003. "From Welfare to Work: Evaluating a Proposed Tax and Benefit Reform Targeted at Single Mothers in Sweden," IZA Discussion Papers 891, Institute for the Study of Labor (IZA). [Downloadable!]
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