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The Predictive Value of Subjective Labour Supply Data: A Dynamic Panel Data Model with Measurement Error


  • Euwals, Rob

    () (CPB Netherlands Bureau for Economic Policy Analysis)


This paper tests the predictive value of subjective labour supply data for adjustments in working hours over time. The idea is that if subjective labour supply data help to predict next year’s working hours, such data must contain at least some information on individual labour supply preferences. This informational content can be crucial to identify models of labour supply. Furthermore, it can be crucial to investigate the need for, or, alternatively, the support for laws and collective agreements on working hours flexibility. In this paper I apply dynamic panel data models that allow for measurement error. I find evidence for the predictive power of subjective labour supply data concerning desired working hours in the German Socio- Economic Panel 1988-1996.

Suggested Citation

  • Euwals, Rob, 2001. "The Predictive Value of Subjective Labour Supply Data: A Dynamic Panel Data Model with Measurement Error," IZA Discussion Papers 400, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp400

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    References listed on IDEAS

    1. John C. Ham, 1982. "Estimation of a Labour Supply Model with Censoring Due to Unemployment and Underemployment," Review of Economic Studies, Oxford University Press, vol. 49(3), pages 335-354.
    2. Wansbeek, Tom, 2001. "GMM estimation in panel data models with measurement error," Journal of Econometrics, Elsevier, vol. 104(2), pages 259-268, September.
    3. Euwals, Rob, 2001. "Female Labour Supply, Flexibility of Working Hours, and Job Mobility," Economic Journal, Royal Economic Society, vol. 111(471), pages 120-134, May.
    4. Rob Euwals & Bertrand Melenberg & Arthur van Soest, 1998. "Testing the predictive value of subjective labour supply data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(5), pages 567-585.
    5. Jennifer Hunt, 1998. "Hours Reductions as Work-Sharing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1), pages 339-381.
    6. Griliches, Zvi & Hausman, Jerry A., 1986. "Errors in variables in panel data," Journal of Econometrics, Elsevier, vol. 31(1), pages 93-118, February.
    7. Charles F. Manski, 2000. "Economic Analysis of Social Interactions," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 115-136, Summer.
    8. Ilmakunnas, Seija & Pudney, Stephen, 1990. "A model of female labour supply in the presence of hours restrictions," Journal of Public Economics, Elsevier, vol. 41(2), pages 183-210, March.
    9. Kahn, Shulamit & Lang, Kevin, 1991. "The Effect of Hours Constraints on Labor Supply Estimates," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 605-611, November.
    10. Pannenberg, Markus & Wagner, Gert G., 2001. "Why Do Overtime Work, Overtime Compensation and the Distribution of Economic Well-Being Evidence for the West Germany and Great Britain," IZA Discussion Papers 318, Institute for the Study of Labor (IZA).
    11. Bell, Linda A. & Freeman, Richard B., 2001. "The incentive for working hard: explaining hours worked differences in the US and Germany," Labour Economics, Elsevier, vol. 8(2), pages 181-202, May.
    12. F. Thomas Juster, 1966. "Consumer Buying Intentions and Purchase Probability: An Experiment in Survey Design," NBER Books, National Bureau of Economic Research, Inc, number just66-2, January.
    13. Stewart, Mark B & Swaffield, Joanna K, 1997. "Constraints on the Desired Hours of Work of British Men," Economic Journal, Royal Economic Society, vol. 107(441), pages 520-535, March.
    14. Kapteyn, Arie & Kooreman, Peter, 1992. "Household labor supply: What kind of data can tell us how many decision makers there are?," European Economic Review, Elsevier, vol. 36(2-3), pages 365-371, April.
    15. Euwals, Rob & van Soest, Arthur, 1999. "Desired and actual labour supply of unmarried men and women in the Netherlands," Labour Economics, Elsevier, vol. 6(1), pages 95-118, March.
    16. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
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    More about this item


    dynamic panel data models; measurement error; subjective data; Labour supply;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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