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Household Labor Supply and Welfare Participation in Sweden

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  • Flood, Lennart

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

  • Hansen, Jörgen

    (IZA)

  • Wahlberg, Roger

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

Abstract

Using a sample of Swedish households, we estimate a household labor supply model assuming that preferences for consumption and leisure can be described by a direct translog utility function. The labor supply and welfare participation decisions are treated as a discrete choice problem, and we assume that these choices follow a simple conditional logit rule. In addition, we allow unobserved individual- specific effects to be correlated across alternatives. We assume that these unobserved effects are drawn from a discrete distribution, and the correlation across alternatives is modeled using factor-loading techniques. Classification error in hours is allowed for by using a multiplicative measurement error specification. The estimates from the structural model yield inelastic labor supply among husbands and positive wage elasticity for wives. Further, the cross elasticities are close to zero.

Suggested Citation

  • Flood, Lennart & Hansen, Jörgen & Wahlberg, Roger, 1999. "Household Labor Supply and Welfare Participation in Sweden," Working Papers in Economics 18, University of Gothenburg, Department of Economics.
    • Handle: RePEc:hhs:gunwpe:0018
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Labor Supply; Welfare Participation; Unobserved Heterogeneity; Factor Loading; Tax Simulation.;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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