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Labor Supply Models: Unobserved Heterogeneity, Nonparticipation and Dynamics

In: Handbook of Econometrics

Author

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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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    Cited by:

    1. Ledic, Marko, 2012. "Estimating Labor Supply at the Extensive Margin in the presence of Sample Selection Bias," MPRA Paper 55745, University Library of Munich, Germany.
    2. repec:eme:ceapzz:s0573-855520140000293006 is not listed on IDEAS
    3. Hartley, Robert Paul & Lamarche, Carlos, 2017. "Behavioral Responses and Welfare Reform: Evidence from a Randomized Experiment," IZA Discussion Papers 10905, Institute for the Study of Labor (IZA).
    4. Panos Pashardes & Alexandros Polycarpou, 2015. "A backward-bending and forward-falling semi-log model of labour supply," University of Cyprus Working Papers in Economics 03-2015, University of Cyprus Department of Economics.
    5. Bachmann, Andreas & Boes, Stefan, 2014. "Private transfers and college students’ decision to work," Economics of Education Review, Elsevier, vol. 42(C), pages 34-42.
    6. Leandro M. Magnusson, 2010. "Inference in limited dependent variable models robust to weak identification," Econometrics Journal, Royal Economic Society, vol. 13(3), pages 56-79, October.
    7. Costas Meghir & David Phillips, 2008. "Labour supply and taxes," IFS Working Papers W08/04, Institute for Fiscal Studies.
    8. Kalb, Guyonne & Kühnle, Daniel & Scott, Anthony & Cheng, Terence Chai & Jeon, Sung-Hee, 2015. "What Factors Affect Doctors' Hours Decisions: Comparing Structural Discrete Choice and Reduced-Form Approaches," IZA Discussion Papers 9054, Institute for the Study of Labor (IZA).
    9. Lanot, Gauthier, 2016. "The Marginal Rate of Substitution and the Specification of Labour Supply Models," Umeå Economic Studies 922, Umeå University, Department of Economics.
    10. Yamada, Ken, 2011. "Labor supply responses to the 1990s Japanese tax reforms," Labour Economics, Elsevier, vol. 18(4), pages 539-546, August.
    11. John K. Dagsvik & Zhiyang Jia, 2014. "Labor supply as a discrete choice among latent jobs: Unobserved heterogeneity and identification," Discussion Papers 786, Statistics Norway, Research Department.
    12. Roberto González & Hector Sala, 2015. "The Frisch Elasticity in the Mercosur Countries: A Pseudo-Panel Approach," Development Policy Review, Overseas Development Institute, vol. 33(1), pages 107-131, January.
    13. Rolf Aaberge & Ugo Colombino, 2014. "Labour Supply Models," Contributions to Economic Analysis,in: Handbook of Microsimulation Modelling, volume 127, pages 167-221 Emerald Publishing Ltd.
    14. Black, Dan A. & Kolesnikova, Natalia & Taylor, Lowell J., 2014. "Why do so few women work in New York (and so many in Minneapolis)? Labor supply of married women across US cities," Journal of Urban Economics, Elsevier, vol. 79(C), pages 59-71.

    More about this item

    JEL classification:

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

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