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The Sensitivity of Labor-Supply Parameter Estimates to Unobserved Individual Effects: Fixed- and Random-Effects Estimates in a Nonlinear Model Using Panel Data

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  • Jakubson, George

Abstract

Life-cycle models of labor supply predict the presence of an unobserved individual effect in the labor-supply equation that is correlated with observed explanatory variables, leading to an omitted variables bias in the cross section. The author examines the sensitivity of parameter estimates to the presence of these effects, using fixed- and random-effect tobit models. The estimated effects of children are too large in the cross section. The estimated intertemporal substitution elasticity ranges from 1.1 to 1.7. The results are similar for fixed- and random-effects models and for models using different specifications of the dependent variable. Copyright 1988 by University of Chicago Press.

Suggested Citation

  • Jakubson, George, 1988. "The Sensitivity of Labor-Supply Parameter Estimates to Unobserved Individual Effects: Fixed- and Random-Effects Estimates in a Nonlinear Model Using Panel Data," Journal of Labor Economics, University of Chicago Press, vol. 6(3), pages 302-329, July.
  • Handle: RePEc:ucp:jlabec:v:6:y:1988:i:3:p:302-29
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    Citations

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    Cited by:

    1. Laisney, François & Pohlmeier, Winfried & Staat, Matthias, 1991. "Estimation of labour supply functions using panel data: a survey," ZEW Discussion Papers 91-05, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. Felteau, Claude, 1989. "Commentaire sur le texte de Bernard Fortin," L'Actualité Economique, Société Canadienne de Science Economique, vol. 65(4), pages 508-514, décembre.
    3. Del Boca, Daniela & Sauer, Robert M., 2009. "Life cycle employment and fertility across institutional environments," European Economic Review, Elsevier, vol. 53(3), pages 274-292, April.
    4. Andrew E. Clark & Yarine Fawaz, 2015. "Retirement and the Marginal Utility of Income," Working Papers halshs-01189009, HAL.
    5. Rosario Crinò, "undated". "Service Offshoring and White-Collar Employment," Working Papers 391, Barcelona Graduate School of Economics.
    6. Melvin Stephens, 2002. "Worker Displacement and the Added Worker Effect," Journal of Labor Economics, University of Chicago Press, vol. 20(3), pages 504-537, July.
    7. Anil Kumar, 2016. "Lifecycle-consistent female labor supply with nonlinear taxes: evidence from unobserved effects panel data models with censoring, selection and endogeneity," Review of Economics of the Household, Springer, vol. 14(1), pages 207-229, March.
    8. Yermack, David, 1995. "Do corporations award CEO stock options effectively?," Journal of Financial Economics, Elsevier, vol. 39(2-3), pages 237-269.
    9. Andrew E. Clark & Yarine Fawaz, 2015. "Retirement and the Marginal Utility of Income," PSE Working Papers halshs-01189009, HAL.
    10. Lizhong Peng & Chad D. Meyerhoefer & Samuel H. Zuvekas, 2016. "The Short‐Term Effect of Depressive Symptoms on Labor Market Outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 25(10), pages 1223-1238, October.
    11. Charles Brown & Greg J. Duncan & Frank P. Stafford, 1996. "Data Watch: The Panel Study of Income Dynamics," Journal of Economic Perspectives, American Economic Association, vol. 10(2), pages 155-168, Spring.
    12. Jakubson, George & Jeong, Kap-Young & Kim, Donghun & Masson, Robert T., 2004. "Oligopolistic Agreement and/or Superiority?: New Findings from New Methodologies and Data," Research Reports 25181, University of Connecticut, Food Marketing Policy Center.
    13. Rosario Crino, 2006. "Are U.S. White-Collar Really at Risk of Service Offshoring?," KITeS Working Papers 183, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Oct 2006.

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