Nonparametric structural estimation of labor supply in the presence of censoring

This paper extends the nonparametric structural method to estimate labor supply developed by Blomquist and Newey (2002) to handle cases in which there are individuals who do not work. The method is then applied to married women in Sweden from 1973 to 1999. I find an uncompensated wage elasticity of...

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Bibliographic Details
Published in:Journal of public economics 2012-02, Vol.96 (1), p.89-103
Main Author: Liang, Che-Yuan
Format: Article
Language:English
Subjects:
Data analysis
Estimation
Female labor supply
Income elasticity
Labour supply
Methodology
Nonlinear budget sets
Nonparametric estimation
Public revenue
Sweden
Tax rates
Tax revenue
Tax revenues
Tax systems
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Summary:This paper extends the nonparametric structural method to estimate labor supply developed by Blomquist and Newey (2002) to handle cases in which there are individuals who do not work. The method is then applied to married women in Sweden from 1973 to 1999. I find an uncompensated wage elasticity of 0.98 and an income elasticity of -0.10, with the participation margin accounting for one third of the wage elasticity and two thirds of the income elasticity. The elasticities vary, however, a lot over time due to differences in tax systems and demographics. I also find results consistent with tax rates being around the net government revenue maximizing rates. ► I develop a nonparametric structural labor supply model that accounts for censoring. ► I estimate the labor supply of married women in Sweden from 1973 to 1999. ► I find an uncompensated wage elasticity of 0.98 and an income elasticity of 0.10.
ISSN:0047-2727
1879-2316
1879-2316
DOI:10.1016/j.jpubeco.2011.08.009