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Modelling voluntary labour supply

Author

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  • James Banks

    () (Institute for Fiscal Studies and University of Manchester)

  • Tanner, Tanner

    (Institute for Fiscal Studies)

Abstract

Recent studies have found a negative relationship between voluntary labour market activity and the opportunity cost of time, measured by the individual's net wage. We argue that the observed negative relationship may be spurious if market and non-market labour supply are jointly determined. We estimate a model of voluntary labour supply that separates the decision to volunteer at all from the decision about how many hours to volunteer. We demonstrate that failure to control for the endogeneity of observed wages with respect to the volunteering decision results in downward bias in the estimated coefficient on the wage variable. We also consider an alternative specification that adjusts the ?rice' of volunteering to take account of the value of activities donated as well as the opportunity cost of the individual's time.

Suggested Citation

  • James Banks & Tanner, Tanner, 1998. "Modelling voluntary labour supply," IFS Working Papers W98/17, Institute for Fiscal Studies.
  • Handle: RePEc:ifs:ifsewp:98/17
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    Cited by:

    1. Kevin Denny, 2003. "The effects of human capital on social capital : a cross-country analysis (version 1.6)," Working Papers 200318, School of Economics, University College Dublin.
    2. Bruna, Bruno & Damiano, Fiorillo, 2009. "Why without Pay? The Intrinsic Motivation between Investment and Consumption in Unpaid Labour Supply," CELPE Discussion Papers 111, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
    3. Bruno, Bruna & Fiorillo, Damiano, 2012. "Why without pay? Intrinsic motivation in the unpaid labour supply," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(5), pages 659-669.
    4. Anneli Kaasa & Eve Parts, 2007. "Individual-Level Determinants Of Social Capital In Europe: Differences Between Country Groups," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 56, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    5. Bruna Bruno & Damiano Fiorillo, 2011. "Why without pay? Intrinsic motivation in unpaid labour supply," Discussion Papers 3_2011, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
    6. Dora L. Costa & Matthew E. Kahn, 2001. "Understanding the Decline in Social Capital, 1952-1998," NBER Working Papers 8295, National Bureau of Economic Research, Inc.

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