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Family Structure and Female Labour Supply in Mexico City

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  • Gong, Xiaodong

    ()
    (NATSEM, University of Canberra)

  • van Soest, Arthur

    ()
    (Tilburg University)

Abstract

This paper investigates labour supply of married women in Mexico City. A static neoclassical structural mode is used. We assume that each woman chooses her labour supply and corresponding income so that her utility is maximized, conditional upon her husband ’s labour supply and earnings. We use a direct translog specification, and include family composition variables as taste shifters. Also taken into account are fixed costs of working, random preferences, and correlation between error terms in wage equations and random preference terms. The wage equation and the labour supply model are estimated jointly by smooth simulated maximum likelihood. We find income elasticities of labour supply of about -0.17, and wage elasticities of about 0.87. The latter is substantially underestimated if the correlation between wage equation errors and random preference terms is not taken into account. We find evidence that the presence of other adult females reduces the negative impact of young children on the mothers’ labour supply.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 214.

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Length: 47 pages
Date of creation: Nov 2000
Date of revision:
Publication status: published in: Journal of Human Resources, 2002, 37(1), 163-191
Handle: RePEc:iza:izadps:dp214

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Keywords: Female labour supply; family structure; discrete regression;

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References

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  1. Brownstone, David & Train, Kenneth, 1998. "Forecasting new product penetration with flexible substitution patterns," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 109-129, November.
  2. Arthur van Soest, 1995. "Structural Models of Family Labor Supply: A Discrete Choice Approach," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 63-88.
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  5. John L. Newman & Paul J. Gertler, 1994. "Family Productivity, Labor Supply, and Welfare in a Low Income Country," Journal of Human Resources, University of Wisconsin Press, vol. 29(4), pages 989-1026.
  6. Daniel McFadden, 1987. "A Method of Simulated Moments for Estimation of Discrete Response Models Without Numerical Integration," Working papers 464, Massachusetts Institute of Technology (MIT), Department of Economics.
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  13. Hausman, Jerry A, 1985. "The Econometrics of Nonlinear Budget Sets," Econometrica, Econometric Society, Econometric Society, vol. 53(6), pages 1255-82, November.
  14. Blundell, Richard William, 1987. "Econometric Approaches to the Specification of Life-Cycle Labour Supply and Commodity Demand Behaviour," CEPR Discussion Papers 150, C.E.P.R. Discussion Papers.
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  17. repec:cup:etheor:v:8:y:1992:i:4:p:518-52 is not listed on IDEAS
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