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Full- and Part-Time Wage Differentials and Female Labor Supply: Discontinuous Budget Constraint and Endogenous Wages

Author

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  • Myeong-Su Yun

    (University of Western Ontario)

Abstract

We introduce a structural model which jointly estimates the full-time wage premium and female labor supply, using the piecewise-linear budget constraint method. Our model incorporates a discontinuous budget line at cut-off hours (35 hours a week), caused by the coexistence of both full- and part-time wage rates, and makes wages fully endogenous to the labor supply choice. We estimate a structural model using the female sample from March 1995 current population survey. The estimate of the full-time premium from our structural model is slightly larger than that of OLS, while Heckman's two-step method predicts a small full-time wage premium. Our estimates for labor supply elasticities lie within the ranges reported in previous research.

Suggested Citation

  • Myeong-Su Yun, 2000. "Full- and Part-Time Wage Differentials and Female Labor Supply: Discontinuous Budget Constraint and Endogenous Wages," Departmental Working Papers 199835, Rutgers University, Department of Economics.
    • Handle: RePEc:rut:rutres:199835
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    References listed on IDEAS

    as
    1. Killingsworth, Mark R. & Heckman, James J., 1987. "Female labor supply: A survey," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 2, pages 103-204, Elsevier.
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    More about this item

    Keywords

    discontinuous budget line; endogenous wages; female labor supply; full-time wage premium; piecewise-linear budget constraint method;
    All these keywords.

    JEL classification:

    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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