Part II SecondGeneration Studies of Labor Supply - PowerPoint PPT Presentation

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Part II SecondGeneration Studies of Labor Supply

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4) Comparing conditional OLS and Tobit estimates of labor supply. 5) Heckman two-stage method ... 3) Analysis of labor force participation decision: PROBIT ... – PowerPoint PPT presentation

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Title: Part II SecondGeneration Studies of Labor Supply


1
Part IISecond-Generation Studies of Labor Supply
  • 1) Introduction
  • 2) Wage equation
  • 3) Analysis of labor force participation decision
  • 4) Comparing conditional OLS and Tobit estimates
    of labor supply
  • 5) Heckman two-stage method

2
1) Introduction
  • Major shortcoming of first-generation studies of
    labor supply neglecting the selectivity bias
    (focus on working cohort only)
  • Data US, 1975, women

3
Variables
  • WHRS...labor supply.. hours worked per year in
    1975
  • WA..age
  • WE...education in years
  • WW..wage.hourly wage rate
  • KL6number of children less than 6 years old
  • K618 ..number of children more than 6 years old
    and less than 18 years old
  • LWW ln(WW)
  • LWHRS ln(WHRS)
  • WA2(WA2)/100
  • AX.labor market experience in years
  • CIT.dummy variable, 1 if live in large city

4
2) Wage equationLn(wage)?0?1WA?2(WA)2?3WE?4A
X?5CIT
5
2) Wage equationLn(wage)?0?1WA?2(WA)2?3WE?4A
X
6
Wages of workers vs. non-workers
7
3) Analysis of labor force participation
decision OLS
8
3) Analysis of labor force participation
decision OLS
9
Problem with OLSvalues of LFP outside the range
0,1
10
3) Analysis of labor force participation
decision PROBIT
11
3) Analysis of labor force participation
decision PROBITpredicted values probability
to work
12
3) Analysis of labor force participation
decision PROBITMarginal effects change in
probability to work due to a marginal increase in
explanatory variables
13
3) Analysis of labor force participation
decision LOGIT
14
LOGIT marginal effects
15
4) Comparing conditional OLS and Tobit estimates
of labor supply
  • Avg.hours(US)ltAvg.hours(CZ)
  • Higher corr(wage,edu) in the US (see next slides)

16
OLS for working women
17
OLS for the whole sample (constructed wages)
18
TOBIT (censored point 0)
19
5) Heckman two-stage method
20
5) Heckman two-stage method
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