Labor supply analysis with non-convex budget sets without the Hausman approach

Arbeitspapier

When the budget set is non-convex the application of the Hausman approach to estimate labor supply functions will in general be cumbersome because labor supply no longer depends solely on marginal criteria (first order conditions). In this paper we demonstrate that the conventional continuous labor supply model (including corner solution for non-participation) with non-convex budget sets in some cases can be estimated using only first order conditions provided the budget curve is continuously differentiable and the utility function belongs to a particular class. We subsequently discuss how the model can be specified econometrically. Finally, we discuss the application of the model to simulate the effect of counterfactual reforms.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Papers ; No. 857

Classification and Topics

• Classification: Wirtschaft ; Model Construction and Estimation ; Time Allocation and Labor Supply
• Subject: Labor supply ; non-convex budget sets ; marginal criteria

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dagsvik, John K. ; Strøm, Steinar
• Event: Veröffentlichung
• (who): Statistics Norway, Research Department
• (where): Oslo
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/192839