Model Of Female Labour Supply Research Articles

Hours of work and the long‐run effects of in‐work transfers

AbstractPolicymakers have increasingly turned to ‘in‐work transfers’ to boost incomes among poorer workers and strengthen work incentives. One attraction of these is that labour supply elasticities are typically greatest at the extensive margin. Because in‐work transfers are normally subject to earnings‐related phase‐outs, they tend to most strongly incentivize part‐time work, weakening incentives to increase hours beyond that. But if part‐time work generates relatively little in the way of human capital and career progression, then policy design should factor in the longer‐term consequences of labour supply choices along the intensive margin. To that end, we use a dynamic model of female labour supply with endogenous human capital accumulation, and study actual and hypothetical welfare reforms in the UK. We show that for a given expansion in the government budget, those reforms that incentivize full‐time work can do considerably more to increase incomes, including among poorer households, and to raise welfare. Our results suggest that in‐work transfers could be refined by paying greater attention to the intensive margin effects through the design of their phase‐outs.

2021 KLEIN LECTURE: AMERICAN DREAM DELAYED: SHIFTING DETERMINANTS OF HOMEOWNERSHIP

AbstractWe develop and estimate a dynamic model of female labor supply, fertility, and transition from renting to first homeownership with panel data, to investigate declining U.S. homeownership over the past decades. Higher house prices and increased female wage rates (that is the opportunity cost of leisure) cause households to postpone their first‐home purchase, because leisure and fertility are complementary to homeownership. Education and female workforce participation are reinforcing factors that raise the value of owning a home. Our estimates show the effects of rising house prices and wage rates more than offset the effects of greater education and workforce participation.

Discrete-Continuous Dynamic Choice Models: Identification and Conditional Choice Probability Estimation

This paper develops a general framework for models, static or dynamic, in which agents simultaneously make both discrete and continuous choices. I show that such models are nonparametrically identified. Based on the constructive identification arguments, I build a novel two-step estimation method in the lineage of Hotz and Miller (1993) but extended to discrete and continuous choice models. The method is especially attractive for complex dynamic models because it significantly reduces the computational burden associated with their estimation. To illustrate my new method, I estimate a dynamic model of female labor supply and consumption.

The joint decision of female labour supply and childcare in Italy under costs and availability constraints

It is widely recognized that childcare has important pedagogical, economic and social effects on both children and parents. This paper is the first attempt to estimate a joint structural model of female labour supply and childcare behavior applied to Italy in order to analyse the effects of relaxing the existing constraints in terms of childcare availability and costs by considering public, private and informal childcare. Results suggest that Italian households might alter their childcare and labour supply behaviors substantially if the coverage rate of formal childcare increases to reach the European targets. Overall, increasing child care coverage is estimated to be more effective in enhancing labour incentives than decreasing existing child care costs, at the same budgetary cost.

How Taxes and Welfare Benefits Affect Work Incentives: A Life‐Cycle Perspective

AbstractPersonal taxes and benefits affect the incentive to work over the life cycle by altering income–age profiles, insuring against adverse shocks and changing the returns to human capital. In this paper, we show how a life‐cycle perspective alters our impression of how the UK tax and benefit system affects women's work incentives. Given that actual longitudinal data conflate age effects, cohort effects and policy effects, and, in the UK, are not available covering the full life cycle, we use simulated data produced by a rich, dynamic structural model of female labour supply and human capital that incorporates family formation and fertility. We find that individuals experience considerable variability in work incentives across life that outweighs the variability across individuals. Changes in the presence of children and a partner, as well as the level of any partner's earnings, are key to explaining these patterns: work incentives vary dramatically depending on family composition and the earnings of any partner, especially for the lower‐skilled, and most women experience a number of different family types during the course of their lives.

Female labour market outcomes and the impact of maternity leave policies

Abstract This paper shows how family policies aimed at reconciling the pressures of family and work generate substantial variation in labour market outcomes across developed countries. We use a life-cycle model of female labour supply and savings behaviour, calibrated to the US economy, to assess the effect of introducing to the US a maternity leave policy similar to Scandinavian-type policies. We focus on the impact on gender differences in participation and in wages. We distinguish between the effect of the job protection offered by maternity leave and the effect of income replacement. Job protection leads to substantial increases in participation of mothers with children under 6, but with little long term effects. The effects on wages are minimal, with negative selection effects offsetting the reduced human capital depreciation. Income replacement has a limited impact on participation or wages. JEL codes: J13; J18; J22

A COMPUTATIONALLY PRACTICAL SIMULATION ESTIMATION ALGORITHM FOR DYNAMIC PANEL DATA MODELS WITH UNOBSERVED ENDOGENOUS STATE VARIABLES*

This article develops a simulation estimation algorithm that is particularly useful for estimating dynamic panel data models with unobserved endogenous state variables. Repeated sampling experiments on dynamic probit models with serially correlated errors indicate the estimator has good small sample properties. We apply the estimator to a model of female labor supply and show that the rarely used Polya model fits the data substantially better than the popular Markov model. The Polya model also produces far less state dependence and many fewer race effects and much stronger effects of education, young children, and husband's income on female labor supply decisions.

A Multi-state model of state dependence in labor supply: Intertemporal labor supply effects of a shift from joint to individual taxation

In this paper I develop an intertemporal discrete choice model of female labor supply to analyze the effects of true state dependence and its effect on labor supply behavior over time. The estimation results show that state dependence is significantly positive at the extensive margin and lower but in general still significant at the intensive margin. I apply this model to study the short and long run labor supply effects of a fundamental reform of the German income tax system, i.e. the shift from joint to individual taxation of married couples and show that labor supply responses are significantly higher in the long run than in the short run.

Classification Error in Dynamic Discrete Choice Models: Implications for Female Labor Supply Behavior

Two key issues in the literature on female labor supply are (i) whether persistence in employment status is due to unobserved heterogeneity or state dependence, and (ii) whether fertility is exogenous to labor supply. Until recently, the consensus was that unobserved heterogeneity is very important and fertility is endogenous. Hyslop (1999) challenged this. Using a dynamic panel probit model of female labor supply including heterogeneity and state dependence, he found that adding autoregressive errors led to a substantial diminution in the importance of heterogeneity. This, in turn, meant he could not reject that fertility is exogenous. Here, we extend Hyslop (1999) to allow classification error in employment status, using an estimation procedure developed by Keane and Wolpin (2001) and Keane and Sauer (2005). We find that a fairly small amount of classification error is enough to overturn Hyslop's conclusions, leading to overwhelming rejection of the hypothesis of exogenous fertility.

Semiparametric Bayesian inference in smooth coefficient models

Abstract We describe procedures for Bayesian estimation and testing in cross-sectional, panel data and nonlinear smooth coefficient models. The smooth coefficient model is a generalization of the partially linear or additive model wherein coefficients on linear explanatory variables are treated as unknown functions of an observable covariate. In the approach we describe, points on the regression lines are regarded as unknown parameters and priors are placed on differences between adjacent points to introduce the potential for smoothing the curves. The algorithms we describe are quite simple to implement—for example, estimation, testing and smoothing parameter selection can be carried out analytically in the cross-sectional smooth coefficient model. We apply our methods using data from the National Longitudinal Survey of Youth (NLSY). Using the NLSY data we first explore the relationship between ability and log wages and flexibly model how returns to schooling vary with measured cognitive ability. We also examine a model of female labor supply and use this example to illustrate how the described techniques can been applied in nonlinear settings.

Female Labor Supply and Child Care in France

We use French household data to estimate a structural model of female labor supply and use of paid child care outside the home. Child care costs are found to have little impact on the labor market participation decision of mothers. The model is used to study various policy issues. The influence of the current tax credit on child care expenditures on the mothers’ labor supply is weak. Suppressing the APE (Parental Allowance for the Education) would cause the female participation rate in our sample to rise by 4 points and the proportion of mothers using paid care to rise by 2 points. The responses of women to policy changes are very heterogenous. Macroeconomic changes in female labor supply are equally due to switches between non-participation and participation and switches between working hours by working women.

Social interactions and habit formation in a model of female labour supply

This paper investigates the influence of habit formation and preference interdependence on labour supply behaviour of married females. A novelty of the paper is that we incorporate direct survey information on reference groups of individuals in a neoclassical labour supply model. For that purpose we first estimate a latent variables model relating the direct information to the `true' but unobserved reference groups. One of the most interesting features of the model is that the presence of young children becomes an insignificant factor in the hours equation while it remains a significant factor in the participation decision. In addition, the labour supply curve is much flatter in a model with habit formation and preference interdependence than in a model without it. Both habit formation and preference interdependence contribute significantly to the explanation of female labour supply.

The Effect of Work Experience on Female Wages and Labour Supply

This paper develops and implements a semiparametric estimator for investigating, with panel data, the importance of human capital and time nonseparable preferences to females when aggregate shocks are present. It provides a set of conditions for making statistical inferences about agents' expectations of their correlated future choices, from a short panel. Under the assumption that observed allocations are Pareto optimal, a dynamic model of female labour supply and participation is estimated, in which experience on the job raises future wages, and time spent off the job in the past directly affects current utility (or, indirectly through productivity in the nonmarket sector).

A model of female labour supply in which supply is dependent upon the chances of finding a job

In this paper, we extend a model of female labour supply, by considering the impact of the local labour market. Thus, in our model, a woman supplies her labour if she has both made the decision to participate and found a job. This extension is of particular importance in times of high unemployment when discouraged worker effects will be at their strongest. We also consider the contribution of such a model to the debate concerning the labour supply of women married to men who are unemployed.

A Microeconomic Model of Female Labour Supply in the Presence of Unemployment and Underemployment

In this paper we model female labor supply within a discrete choice framework. Two different rationing mechanisms are incorporated into the model: involuntary unemployment and underemployment. The model is set-up as a generalization of the Double-Hurdle model of CRAGG (1971). Our estimation strategy consists in estimating the model first without taking into account the rationing mechanisms (Model 1). Next we introduce these mechanisms but do not use the information on sample separation (Model 2). Finally, the information is used and the likelihood altered accordingly (Model 3). It turns out the information on rationing makes a dramatic difference on the preference parameters and hence, on desired hours of work. This suggest that the labor supply models that incorporate unobserved constraints are potentially biasing the estimation of preference parameters. Our results show that the uncompensated wage and income elasticities are slightly overestimated in Model 1 and largely underestimated in Model 2 relative to Model 3. Un modele microeconomique de l'offre de travail des femmes en presence de sous-emploi et de chomage involontaire RESUME. - Dans ce travail nous mod6lisons l'offre de travail des femmes a l'interieur

A simultaneous discrete choice model of labor supply and wages for married women in Switzerland

A simultaneous model of female labor supply and wages is estimated. The labor supply model is formulated as a trichotomous discrete choice model in order to take into account the bimodal distribution of observed working hours. For women without observed wages the probability of choosing the observed work category is integrated over all values of the wage. The model is estimated using a sample of married women in Switzerland. The budget constraint is constructed by computing the disposable income for each hours point, taking into account the Swiss income tax system.

Sample Selection in a Model of Female Labour Supply: An Alternative Approach

Suggests an alternative and computationally simpler approach of non‐random sampling of labour economics and represents an observed outcome of an individual female′s choice of whether or not to participate in the labour market. Concludes that there is an alternative to the Heckman two‐step estimator.

A model of female labour supply in the presence of hours restrictions

We develop a discrete choice model of female labour supply in Finland, using a data set constructed by merging the 1980 Labour Force Survey and Housing and Population Census. This contains observations on the perceived incidence of constraints in the labour market, and allows us to identify the effects of such constraints on observed labour supply. Approximately one in five women appears to be seriously constrained in her choice of hours of work. Our estimated model implies that the response of labour supply to variation in tax and wage rates is rather small.

Testing for exogeneity in limited dependent variable models using a simplified likelihood ratio statistic

AbstractA simple likelihood‐ratio statistic for the weak exogeneity of the continuously observed endogenous variables is presented for the limited information simultaneous equations models in which a single endogenous variable is censored. The statistic is a likelihood ratio test statistic for the exclusion of the reduced form residuals of the continuously observed endogenous variables and is asymptotically locally most powerful. The procedure is illustrated by an application to a model of female labour supply.

Specification tests for distributional assumptions in the Tobit model

The recent development of distribution robust estimators for the censored regression model allows for the construction of specification tests of the normality and homoskedasticity assumption of the Tobit model. This paper considers Hausman (1978) specification tests for the Tobit model that are based on Powell's (1986) symmetrically censored least squares estimator. Testing for models with explanatory variables that are endogeneous is considered, as well as the simpler case where the explanatory variables are exogenous. Testing of the maintained conditional symmetry assumption of the symmetrically censored least squares estimator is also considered. The tests are implemented in an empirical example of a model of female labor supply.