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Utilizing Two Types of Survey Data to Enhance the Accuracy of Labor Supply Elasticity Estimation

Author

Listed:
  • Cheng Chou

    (University of Leicester)

  • Ruoyao Shi

    (Department of Economics, University of California Riverside)

Abstract

We argue that despite its nonclassical measurement errors, the hours worked in the Current Population Survey (CPS) can still be utilized to enhance the overall accuracy of the estimator of the labor supply parameters based on the American Time Use Survey (ATUS), if done properly. We propose such an estimator that is a weighted average between the two stage least squares estimator based on the CPS and a non-standard estimator based on the ATUS.

Suggested Citation

  • Cheng Chou & Ruoyao Shi, 2020. "Utilizing Two Types of Survey Data to Enhance the Accuracy of Labor Supply Elasticity Estimation," Working Papers 202018, University of California at Riverside, Department of Economics.
    • Handle: RePEc:ucr:wpaper:202018
    as

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    File URL: https://economics.ucr.edu/repec/ucr/wpaper/202018.pdf
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    References listed on IDEAS

    as
    1. Cheng Chou & Ruoyao Shi, 2019. "What Time Use Surveys Can (And Cannot) Tell Us About Labor Supply," Working Papers 202017, University of California at Riverside, Department of Economics, revised Jul 2020.
    2. Bound, John & Brown, Charles & Mathiowetz, Nancy, 2001. "Measurement error in survey data," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 59, pages 3705-3843, Elsevier.
    3. Hansen, Bruce E., 2016. "Efficient shrinkage in parametric models," Journal of Econometrics, Elsevier, vol. 190(1), pages 115-132.
    4. Garry F. Barrett & Daniel S. Hamermesh, 2019. "Labor Supply Elasticities: Overcoming Nonclassical Measurement Error Using More Accurate Hours Data," Journal of Human Resources, University of Wisconsin Press, vol. 54(1), pages 255-265.
    5. Fan, Yanqin & Ullah, Aman, 1999. "Asymptotic Normality of a Combined Regression Estimator," Journal of Multivariate Analysis, Elsevier, vol. 71(2), pages 191-240, November.
    6. Xiaohong Chen & Han Hong & Elie Tamer, 2005. "Measurement Error Models with Auxiliary Data," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(2), pages 343-366.
    7. Xu Cheng & Zhipeng Liao & Ruoyao Shi, 2019. "On uniform asymptotic risk of averaging GMM estimators," Quantitative Economics, Econometric Society, vol. 10(3), pages 931-979, July.
    8. Daniel S. Hamermesh & Harley Frazis & Jay Stewart, 2005. "Data Watch: The American Time Use Survey," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 221-232, Winter.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    labor supply elasticity; averaging estimator; bias-variance trade-off; measurement error;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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