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A Simultaneous Wage and Labor Supply Model with Hours Restrictions


  • Martijn P. Tummers
  • Isolde Woittiez


Two common assumptions in neoclassical labor supply models are relaxed by introducing hours restrictions and endogenous wages into a labor supply model. First, we incorporate the possibility that an individual is faced with a limited availability of jobs with different, distinct, numbers of hours. Moreover, the wage rate is allowed to depend on the number of working hours. The latter implies a nonlinear budget constraint. The model is estimated for data from a Dutch labor mobility survey. The results for females suggest not only the existence of hours restrictions, but also of a nonlinear budget constraint. Including both features generates a simulated hours distribution much more in line with the actual data than does a standard Tobit model.

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  • Martijn P. Tummers & Isolde Woittiez, 1991. "A Simultaneous Wage and Labor Supply Model with Hours Restrictions," Journal of Human Resources, University of Wisconsin Press, vol. 26(3), pages 393-423.
  • Handle: RePEc:uwp:jhriss:v:26:y:1991:i:3:p:393-423

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    References listed on IDEAS

    1. Lundberg, Shelly J, 1988. "Labor Supply of Husbands and Wives: A Simultaneous Equations Approach," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 224-235, May.
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