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Slowly, but Changing: How Does Genuine State Dependence Affect Female Labor Supply on the Extensive and Intensive Margin

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  • Peter Haan

    ()
    (DIW, Berlin)

Abstract

In this paper I develop an intertemporal discrete choice model of female labor supply that allows to analyze state dependence and labor supply along the extensive and the intensive margin. Drawing on microsimulation the nonlinearities in the household budget set are captured and thus work incentives of both spouses can be accurately described. Unobserved heterogeneity is modeled nonparametrically and the initial conditions problem is explicitly accounted for. The estimation results show that state dependence is significantly positive at the extensive margin, yet modest on the intensive margin. Using the Markov chain property, I analyze the dynamics of labor supply behavior. I find that labor supply elasticities on both margins differ significantly between the short and long run.

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Bibliographic Info

Paper provided by JEPS in its series JEPS Working Papers with number 06-002.

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Length: 29 pages
Date of creation: Apr 2006
Date of revision:
Handle: RePEc:jep:wpaper:06002

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Related research

Keywords: Genuine state dependence; labor supply of married women; panel data; unobserved heterogeneity; microsimulation;

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References

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  1. Jeffrey M Wooldridge, 2002. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," CeMMAP working papers CWP18/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
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  7. Blundell, Richard William & Ham, John & Meghir, Costas, 1987. "Unemployment and Female Labour Supply," CEPR Discussion Papers 149, C.E.P.R. Discussion Papers.
  8. Michaud, P.C. & Vermeulen, F.M.P., 2004. "A Collective Retirement Model: Identification and Estimation in the Presence of Externalities," Discussion Paper 2004-75, Tilburg University, Center for Economic Research.
  9. Bo E. Honoré & Ekaterini Kyriazidou, 2000. "Panel Data Discrete Choice Models with Lagged Dependent Variables," Econometrica, Econometric Society, vol. 68(4), pages 839-874, July.
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  12. Euwals, R.W. & Soest, A.H.O. van, 1996. "Desired and Actual Labour Supply of Unmarried Men and Women in the Netherlands," Discussion Paper 1996-23, Tilburg University, Center for Economic Research.
  13. Victoria Prowse, 2005. "State Dependence in a Multi-state Model of Employment Dynamics," Economics Series Working Papers 2005-W20, University of Oxford, Department of Economics.
  14. Dean R. Hyslop, 1999. "State Dependence, Serial Correlation and Heterogeneity in Intertemporal Labor Force Participation of Married Women," Econometrica, Econometric Society, vol. 67(6), pages 1255-1294, November.
  15. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 225-38, January.
  16. Viktor Steiner & Katharina Wrohlich, 2004. "Household Taxation, Income Splitting and Labor Supply Incentives: A Microsimulation Study for Germany," Discussion Papers of DIW Berlin 421, DIW Berlin, German Institute for Economic Research.
  17. Anders Skrondal & Sophia Rabe-Hesketh, 2007. "Latent Variable Modelling: A Survey," Scandinavian Journal of Statistics, Danish Society for Theoretical Statistics & Finnish Statistical Society & Norwegian Statistical Association & Swedish Statistical Association, vol. 34(4), pages 712-745.
  18. Myoung-Jae Lee & Yoon-Hee Tae, 2005. "Analysis of Labour Participation Behaviour of Korean Women with Dynamic Probit and Conditional Logit," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(1), pages 71-91, 02.
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Citations

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Cited by:
  1. Peter Haan & Arne Uhlendorff, 2013. "Intertemporal labor supply and involuntary unemployment," Empirical Economics, Springer, vol. 44(2), pages 661-683, April.
  2. Richiardi Matteo & Poggi Ambra, 2012. "Imputing Individual Effects in Dynamic Microsimulation Models. An application of the Rank Method," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201213, University of Turin.
  3. Nisar Ahmad, 2014. "State Dependence in Unemployment," International Journal of Economics and Financial Issues, Econjournals, vol. 4(1), pages 93-106.

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