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Labor Supply as a Choice Among Latent Jobs: Unobserved Heterogeneity and Identification

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  • John K. Dagsvik
  • Zhiyang Jia

Abstract

This paper discusses aspects of a modeling framework in which the notion of job choice is fundamental. In this framework, workers are assumed to have preferences over latent job opportunities belonging to worker‐specific choice sets from which they choose their preferred job. The main contribution of this paper is an analysis of the identification problem under various conditions, when conventional cross‐section micro‐data are applied. The modeling framework is applied to analyze labor supply behavior for married/cohabiting couples using Norwegian micro data. Based on the empirical model, we discuss further qualitative properties of the model and simulation of counterfactual policy reforms. Copyright © 2015 John Wiley & Sons, Ltd.

Suggested Citation

  • John K. Dagsvik & Zhiyang Jia, 2016. "Labor Supply as a Choice Among Latent Jobs: Unobserved Heterogeneity and Identification," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 31(3), pages 487-506, April.
  • Handle: RePEc:wly:japmet:v:31:y:2016:i:3:p:487-506
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    Citations

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    Cited by:

    1. John K. Dagsvik & Steinar Strøm, 2017. "Labor supply analysis with non-convex budget sets without the Hausman approach," Discussion Papers 857, Statistics Norway, Research Department.
    2. Thor O. Thoresen & Trine Engh Vattø, 2017. "An Up-to-Date Joint Labor Supply and Child Care Choice Model," CESifo Working Paper Series 6641, CESifo Group Munich.
    3. Dagsvik, John K, 2017. "Invariance Axioms and Functional Form Restrictions in Structural Models," Memorandum 08/2017, Oslo University, Department of Economics.
    4. repec:eee:matsoc:v:91:y:2018:i:c:p:85-95 is not listed on IDEAS
    5. Zhiyang Jia & Trine E. Vattø, 2016. "The path of labor supply adjustment. Sources of lagged responses to tax-benefit reforms," Discussion Papers 854, Statistics Norway, Research Department.

    More about this item

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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