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Labor Supply Models: Unobserved Heterogeneity, Nonparticipation and Dynamics

In: Handbook of Econometrics

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  • Blundell, Richard
  • MaCurdy, Thomas
  • Meghir, Costas

Abstract

This chapter is concerned with the identification and estimation of models of labor supply. The focus is on the key issues that arise from unobserved heterogeneity, nonparticipation and dynamics. We examine the simple "static" labor supply model with proportional taxes and highlight the problems surrounding nonparticipation and missing wages. The difference-in-differences approach to estimation and identification is developed within the context of the labor supply model. We also consider the impact of incorporating nonlinear taxation and welfare program participation. Family labor supply is looked at from both the unitary and collective perspectives. Finally we consider intertemporal models focusing on the difficulties that arise with participation and heterogeneity.

Suggested Citation

  • Blundell, Richard & MaCurdy, Thomas & Meghir, Costas, 2007. "Labor Supply Models: Unobserved Heterogeneity, Nonparticipation and Dynamics," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 69, Elsevier.
    • Handle: RePEc:eee:ecochp:6a-69
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    JEL classification:

    • C39 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Other

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