Estimation of Permanent and Transitory Response Functions in Panels Data: A Dynamic Labor Supply Model
The purpose of this paper is to develop and test a dynamic labor supply model which incorporates the essential features of these previous models. The issues of permanent and transitory effects and of cross section versus time series can be addressed much more directly given the recent availability of panel data featuring repeated observation over extended periods of time of the same individuals. The labor supply model presented emphasizes the effect of permanent individual wage differences on permanent annual hours of work and the effect of serially correlated transitory individual wage variation on short run hours of work. Permanent and transitory deviations from the aggregate labor supply functions are also allowed. A by-product is an analysis of the relative roles of permanent and transitory components of both wages and hours in the distribution of earnings. The first section introduces the topic and describes related works. The second section provides a description of the essential features of the model. Section III provides a detailed outline of the empirical model and method of obtaining maximum likelihood estimates of parameters. Section IV provides a discussion of the results including the components of variation in wages, hours, and earnings. Comparisons are made by schooling group, by experience group, by union status, and by wife's work status. Finally the results are summarized in Section V.
|Date of creation:||Jul 1977|
|Publication status:||published as Lillard, 1978. "Estimation of Permanent and Transitory Response Functions in Panel Data: A Dynamic Labor Supply Model," Annales de l'inséé, .|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters,in: A Theory of the Consumption Function, pages 1-6 National Bureau of Economic Research, Inc.
- T. Aldrich Finegan, 1962. "Hours of Work in the United States: A Cross-Sectional Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 452-452.
- Milton Friedman & Simon Kuznets, 1954. "Income from Independent Professional Practice," NBER Books, National Bureau of Economic Research, Inc, number frie54-1.
- Kniesner, Thomas J, 1976. "An Indirect Test of Complementarity in a Family Labor Supply Model," Econometrica, Econometric Society, vol. 44(4), pages 651-669, July.
- Milton Friedman & Simon Kuznets, 1954. "The Data on Income from Independent Professional Practice," NBER Chapters,in: Income from Independent Professional Practice, pages 46-62 National Bureau of Economic Research, Inc.
- Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
- Klevmarken, N Anders & Quigley, John M, 1976. "Age, Experience, Earnings, and Investments in Human Capital," Journal of Political Economy, University of Chicago Press, vol. 84(1), pages 47-72, February.
- Rosen, Sherwin, 1969. "On the Interindustry Wage and Hours Structure," Journal of Political Economy, University of Chicago Press, vol. 77(2), pages 249-273, March/Apr.
- Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
- Lucas, Robert Jr. & Prescott, Edward C., 1974. "Equilibrium search and unemployment," Journal of Economic Theory, Elsevier, vol. 7(2), pages 188-209, February.
- Lucas, Robert E, Jr & Rapping, Leonard A, 1969. "Real Wages, Employment, and Inflation," Journal of Political Economy, University of Chicago Press, vol. 77(5), pages 721-754, Sept./Oct.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:0185. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.