IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Grouped-data estimation and testing in simple labor-supply models

Listed author(s):
  • Angrist, Joshua D.

Labor supply research has not yet produced a clear statement of the size of the labor supply elasticity nor how it should be measured. Measurement error in hourly wage data and the use of inappropriate identifying assumptions can account for the poor performance of some empirical labor supply models. I propose here a generalization of Wald's method of fitting straight lines that is robust to measurement error, imposes mild testable identifying assumptions, and is useful for the estimation of life-cycle labor supply models with panel data. A convenient Two-Stage Least Squares (TSLS) equivalent of the generalized Wald estimator is presented and a TSLS over-identification test statistic is shown to be the test statistic for equality of alternative Wald estimates of the same parameter. These results are applied to labor supply models using a sample of continuously employed prime-age males. Labor supply elasticities from the two best-fitting models that pass tests of over-identifying restrictions range from 0.6 to 0.8 . A test for measurement error based on the difference between generalized Wald and Analysis of Covariance estimators is also proposed. Application of the test indicates that measurement error can account for low or negative Analysis of Covariance estimates of labor supply elasticities.

(This abstract was borrowed from another version of this item.)

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.sciencedirect.com/science/article/pii/0304-4076(91)90101-I
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Journal of Econometrics.

Volume (Year): 47 (1991)
Issue (Month): 2-3 (February)
Pages: 243-266

as
in new window

Handle: RePEc:eee:econom:v:47:y:1991:i:2-3:p:243-266
Contact details of provider: Web page: http://www.elsevier.com/locate/jeconom

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:econom:v:47:y:1991:i:2-3:p:243-266. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.