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Analyzing labor supply behavior with latent job opportunity sets and institutional choice constraints

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  • John K. Dagsvik

    ()

  • Steinar Strøm

    ()

Abstract

In this paper we discuss a general framework for analyzing labor supply behavior in the presence of complicated budget- and quantity constraints of which some may be unobservable. The point of departure is that an individual's labor supply decision can be considered as a choice from a set of discrete alternatives (jobs). These jobs are characterized by attributes such as hours of work, sector specific wages and other sector specific aspects of the jobs. We focus in particular on theoretical justification of functional form assumptions and properties of the random components of the model. The paper also includes an empirical application based on Norwegian data, in which the labor supply of married women is estimated.

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Bibliographic Info

Paper provided by ICER - International Centre for Economic Research in its series ICER Working Papers with number 15-2002.

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Length: 39 pages
Date of creation: Mar 2002
Date of revision:
Handle: RePEc:icr:wpicer:15-2002

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Keywords: Labor supply; non-convex budget sets; non-pecuniary job-attributes; sector-specific wages;

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References

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  1. Rosen, Harvey S, 1976. "Taxes in a Labor Supply Model with Joint Wage-Hours Determination," Econometrica, Econometric Society, vol. 44(3), pages 485-507, May.
  2. Dagsvik, John K. & Strøm, Steinars, 2003. "Analyzing labor supply behavior with latent job opportunity sets and institutional choice constraints," Memorandum 11/2003, Oslo University, Department of Economics.
  3. Daniel McFadden, 1977. "Modelling the Choice of Residential Location," Cowles Foundation Discussion Papers 477, Cowles Foundation for Research in Economics, Yale University.
  4. Joseph G. Altonji & Christina H. Paxson, 1987. "Labor Supply Preferences, Hours Constraints, and Hours-Wage Tradeoffs," NBER Working Papers 2121, National Bureau of Economic Research, Inc.
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  7. Kapteyn, A.J. & Kooreman, P. & Soest, A.H.O. van, 1990. "Quantity rationing and concavity in a flexible household labor supply model," Open Access publications from Tilburg University urn:nbn:nl:ui:12-364376, Tilburg University.
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  12. John K. Dagsvik, 1996. "Aggregation in Matching Markets," Discussion Papers 173, Research Department of Statistics Norway.
  13. Dickens, William T & Lundberg, Shelly J, 1993. "Hours Restrictions and Labor Supply," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(1), pages 169-92, February.
  14. Edin, Per-Anders & Zetterberg, Johnny, 1992. "Interindustry Wage Differentials: Evidence from Sweden and a Comparison with the United States," American Economic Review, American Economic Association, vol. 82(5), pages 1341-49, December.
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  18. Dagsvik, John K, 1994. "Discrete and Continuous Choice, Max-Stable Processes, and Independence from Irrelevant Attributes," Econometrica, Econometric Society, vol. 62(5), pages 1179-1205, September.
  19. Aaberge, Rolf & Colombino, Ugo & Strom, Steinar, 1999. "Labour Supply in Italy: An Empirical Analysis of Joint Household Decisions, with Taxes and Quantity Constraints," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(4), pages 403-22, July-Aug..
  20. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March.
  21. Ransom, Michael R, 1987. "An Empirical Model of Discrete and Continuous Choice in Family Labor Supply," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 465-72, August.
  22. Edin, P-A. & Zetterberg, J., 1989. "Inter-Industry Wage Differntials: Evidence From Sweden And A Comparison Withthe United States," Papers 1989f, Uppsala - Working Paper Series.
  23. Arrufat, Jose Luis & Zabalza, Antonio, 1986. "Female Labor Supply with Taxation, Random Preferences, and Optimization Errors," Econometrica, Econometric Society, vol. 54(1), pages 47-63, January.
  24. Ilmakunnas, Seija & Pudney, Stephen, 1990. "A model of female labour supply in the presence of hours restrictions," Journal of Public Economics, Elsevier, vol. 41(2), pages 183-210, March.
  25. Aaberge, Rolf & Dagsvik, John K & Strom, Steinar, 1995. " Labor Supply Responses and Welfare Effects of Tax Reforms," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 635-59, December.
  26. Wales, T J & Woodland, A D, 1979. "Labour Supply and Progressive Taxes," Review of Economic Studies, Wiley Blackwell, vol. 46(1), pages 83-95, January.
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Citations

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Cited by:
  1. Boeters, Stefan & Savard, Luc, 2013. "The Labor Market in Computable General Equilibrium Models," Handbook of Computable General Equilibrium Modeling, Elsevier.
  2. John K. Dagsvik & Steinar Strøm, 2003. "Analyzing Labor Supply Behavior with Latent Job Opportunity Sets and Institutional Choice Constraints," Discussion Papers 344, Research Department of Statistics Norway.
  3. Stefan Boeters & Luc Savard, 2012. "The Labour Market in CGE Models," CPB Discussion Paper 201, CPB Netherlands Bureau for Economic Policy Analysis.

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