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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

    ()
    (Statistics Norway)

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 are unobserved. 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 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 Research Department of Statistics Norway in its series Discussion Papers with number 344.

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Date of creation: Mar 2003
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Handle: RePEc:ssb:dispap:344

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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. 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.
  2. Magnac, Th, 1991. "Segmented or Competitive Labor Markets," Econometrica, Econometric Society, vol. 59(1), pages 165-87, January.
  3. Kohlhase, Janet E, 1986. "Labor Supply and Housing Demand for One- and Two-Earner Households," The Review of Economics and Statistics, MIT Press, vol. 68(1), pages 48-57, February.
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  5. Hausman, Jerry & Ruud, Paul, 1984. "Family Labor Supply with Taxes," American Economic Review, American Economic Association, vol. 74(2), pages 242-48, May.
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  7. 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.
  8. 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.
  9. 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.
  10. 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.
  11. 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.
  12. Altonji, Joseph G & Paxson, Christina H, 1988. "Labor Supply Preferences, Hours Constraints, and Hours-Wage Trade-Offs," Journal of Labor Economics, University of Chicago Press, vol. 6(2), pages 254-76, April.
  13. 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.
  14. Heckman, James J & Sedlacek, Guilherme L, 1990. "Self-selection and the Distribution of Hourly Wages," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages S329-63, January.
  15. Hausman, Jerry A, 1985. "The Econometrics of Nonlinear Budget Sets," Econometrica, Econometric Society, vol. 53(6), pages 1255-82, November.
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  17. Blomquist, Soren, 1996. "Estimation methods for male labor supply functions How to take account of nonlinear taxes," Journal of Econometrics, Elsevier, vol. 70(2), pages 383-405, February.
  18. John K. Dagsvik, 1996. "Aggregation in Matching Markets," Discussion Papers 173, Research Department of Statistics Norway.
  19. Nakamura, Alice & Nakamura, Masao, 1981. "A Comparison of the Labor Force Behavior of Married Women in the United States and Canada, with Special Attention to the Impact of Income Taxes," Econometrica, Econometric Society, vol. 49(2), pages 451-89, March.
  20. Daniel McFadden, 1977. "Modelling the Choice of Residential Location," Cowles Foundation Discussion Papers 477, Cowles Foundation for Research in Economics, Yale University.
  21. 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.
  22. 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.
  23. William T. Dickens & Shelly J. Lundberg, 1985. "Hours Restrictions and Labor Supply," NBER Working Papers 1638, National Bureau of Economic Research, Inc.
  24. Blomquist, N. Soren, 1983. "The effect of income taxation on the labor supply of married men in Sweden," Journal of Public Economics, Elsevier, vol. 22(2), pages 169-197, November.
  25. 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..
  26. 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.
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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. Stefan Boeters & Luc Savard, 2012. "The Labour Market in CGE Models," CPB Discussion Paper 201, CPB Netherlands Bureau for Economic Policy Analysis.
  3. 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.

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