Labor Supply as a Choice Among Latent Jobs: Unobserved Heterogeneity and Identification

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThis paper discusses aspects of a framework for modeling labor supply where the notion of job choice is fundamental. In this framework, workers are assumed to have preferences over latent job opportunities belonging to worker-specific choice sets from which they choose their preferred job. The observed hours of work and wage is interpreted as the job-specific hours and wage of the chosen job. The main contribution of this paper is an analysis of the identification problem of this framework under various conditions, when conventional cross-section micro-data are applied.The modeling framework is applied to analyze labor supply behavior for married/cohabiting couples using Norwegian micro data. Specifically, we estimate two model versions with in the general framework. Based on the empirical results, we discuss further qualitative properties of the model versions. Finally, we apply the preferred model version to conduct a simulation experiment of a counterfactual policy reforms.Keywords: Labor supply, non-pecuniary job attributes, latent choice sets, random utility models, identification.JEL classification: J22, C51. Acknowledgments:We thank Jørgen Aasness, Thor Olav Thoresen, Terje Skjerpen and the participants in workshops at IZA, Bonn, and Statistics Norway for helpful comments. We are particularly grateful for the extensive and constructive criticism, help and suggestions by Thierry Magnac and two anonymous referees.

An up-to-date joint labor supply and child care choice model

“…In the following we provide further details of our two-parent model of joint labor supply and child care choice. The model is a unitary household model 19 based on a discrete choice framework, influenced by several studies using the discrete choice formulation both in analysis of standard labor supply (Dagsvik, 1994;Aaberge et al, 1995;van Soest, 1995;Dagsvik and Strøm, 2006;Dagsvik et al, 2014;Dagsvik and Jia, 2016) and in joint labor supply and child care choice setting (Kornstad and Thoresen, 2007;Apps et al, 2016;Gong and Breunig, 2017). We depart from a modeling approach that shares similarities with Kornstad and Thoresen (2007), where parents choose among job and child care alternatives.…”

Making work pay in Croatia: An exante evaluation of two in-work benefits using miCROmod

“…In this standard model, the agent chooses hours of leisure (total time endowment minus work hours) and the implied disposable income to maximise her utility subject to the budget constraint. However, despite the discrete nature of choice in Van Soest-type models, some authors argue that these models are theoretically very similar to the continuous models (Dagsvik et al, 2014;Dagsvik and Jia, 2016).…”

“…We also model the labour supply within the discrete choice framework but depart from the standard approach in that we use a theoretically sounder modelling framework where agents choose "jobs" rather than hours of leisure/work. The framework has been introduced by Dagsvik (1994), but despite its theoretical advantages, it is still relatively rarely used (eg, Aaberge et al, 1995;Aaberge et al, 1999;Aaberge et al, 2000;Dagsvik and Strøm, 2006;Kornstad and Thoresen, 2007;Di Tommaso et al, 2009;Dagsvik et al, 2009;Dagsvik et al, 2011;Aaberge and Flood, 2013;Dagsvik et al, 2014;Dagsvik and Jia, 2016;Capéau et al, 2016).…”

“…Following Dagsvik and Jia (2016), we specify the opportunity measure for each gender as a linear function of observable personal characteristics and a constant. More specifically, we specify ln θs as…”

“…are years of age and work experience. Regarding the opportunity density, we also follow Dagsvik and Jia (2016), who model it as uniform for all positive hours of work except for a peak at hours of work observed to carry significant mass. As the only significant peak in our observed distribution of positive hours of work is the one associated with annual full-time work (2080 hours), we model ln gs ( h s ) simply as a constant specific to full-time work: ln gs ( h s ) = π s if hs = 2080.…”