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Inverted U-shaped relationship between non-labor income and labor hours, with wage rates as the threshold variable

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  • Qi Wang

    (School of Public Administration, Shandong Technology and Business University, Yantai, China)

Abstract

Non-labor income is a crucial factor influencing time allocation, and prior studies have primarily concentrated on the linear association between non-labor income and labor hours. Utilizing micro-survey data from the CFPS in 2018 and 2020 and employing the panel threshold model, this paper empirically identifies a double threshold with the wage rate as the threshold variable. This finding reveals a non-linear relationship between non-labor income and labor hours. The two thresholds categorize the relationship into three intervals. In the first interval, non-labor income significantly promotes labor hours, while in the second and third intervals, non-labor income significantly decreases labor hours, exhibiting slightly varying degrees of influence. In general, the relationship between non-labor income and labor hours demonstrates an irregular inverted U-shaped pattern. Upon dividing the workers in the sample into three groups based on the two thresholds, it is observed that wage rates exhibit a positive correlation with non-labor income.

Suggested Citation

  • Qi Wang, 2024. "Inverted U-shaped relationship between non-labor income and labor hours, with wage rates as the threshold variable," Review of Economic Assessment, Anser Press, vol. 3(1), pages 20-34, February.
    • Handle: RePEc:bba:j00010:v:3:y:2024:i:1:p:20-34:d:303
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    References listed on IDEAS

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