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The Effect of Hours Constraints on Labor Supply Estimates

  • Kahn, Shulamit
  • Lang, Kevin

Almost all labor-supply models are estimated under the assumption that workers are free to choose their hours. However, theory, casual empiricism, and survey data suggest that many workers are not free to vary the hours within a job. Consequently, labor-supply estimates based on actual hours of work may be biased. Using Canadian data on desired hours of work, the authors find that using actual hours causes labor-supply estimates to be biased upwards. Copyright 1991 by MIT Press.

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Article provided by MIT Press in its journal Review of Economics & Statistics.

Volume (Year): 73 (1991)
Issue (Month): 4 (November)
Pages: 605-11

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Handle: RePEc:tpr:restat:v:73:y:1991:i:4:p:605-11
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  1. Lang, Kevin, 1989. "Why was there mandatory retirement?," Journal of Public Economics, Elsevier, vol. 39(1), pages 127-136, June.
  2. Jeremy I. Bulow & Lawrence H. Summers, 1985. "A Theory of Dual Labor Markets with Application to Industrial Policy, Discrimination and Keynesian Unemployment," NBER Working Papers 1666, National Bureau of Economic Research, Inc.
  3. Dickens, William T & Lundberg, Shelly J, 1993. "Hours Restrictions and Labor Supply," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(1), pages 169-92, February.
  4. Shelly J. Lundberg, 1984. "Tied Wage-Hours Offers and the Endogeneity of Wages," NBER Working Papers 1431, National Bureau of Economic Research, Inc.
  5. Ball, Laurence, 1990. "Intertemporal Substitution and Constraints on Labor Supply: Evidence from Panel Data," Economic Inquiry, Western Economic Association International, vol. 28(4), pages 706-24, October.
  6. Rosen, Sherwin, 1987. "The theory of equalizing differences," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 12, pages 641-692 Elsevier.
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