Labor supply , elasticity , random utility models , wages
Abstract:
There is still considerable dispute about the magnitude of labor
supply elasticities. While differences in micro and macro estimates are
recently attributed to frictions and adjustment costs, we show that relatively
low labor supply elasticities derived from microeconometric models
can also be explained by modeling assumptions with respect to wages.
Specifically, we estimate 3,456 structural labor supply models each representing
a plausible combination of frequently made choices. While most
model assumptions do not systematically affect labor supply elasticities,
our analysis shows that the results are very sensitive to the treatment of
wages. In particular, the often-made but highly restrictive independence
assumption between preferences and wages is key. To overcome this restriction,
we propose a flexible estimation strategy that nests commonly
used models. We show that loosening the exogeneity assumption leads to
labor supply elasticities that are much higher.
Dieser Eintrag ist Teil der Universitätsbibliographie.
Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.
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