Smoothed binary regression quantiles

This paper extends results regarding smoothed median binary regression to general smoothed binary quantile regression, discusses the interpretation of the resulting estimators under alternative assumptions, and shows how they may be used to obtain semiparametric estimates of counterfactual probabilities. The estimators are applied to a model of labour force participation of married women in the USA. We find that the elasticity with respect to non‐labour income is significantly negative only for women that belong to the middle of the conditional willingness‐to‐participate (WTP) distribution. In comparing the quantile models with parametric logit and semiparametric single‐index specifications, we find that the models agree closely for women around the centre of the WTP distribution, but there are considerable disagreements as we move towards the tails of the distribution. Copyright © 2006 John Wiley & Sons, Ltd.     

Joint estimation of sequential labor force participation and fertility decisions using Markov chain Monte Carlo techniques

We analyze the effect of children on the labor supply of married women in a framework that accounts for the endogeneity of labor market and fertility decisions, for the heterogeneity of the effects of children and their correlation with the fertility decisions, and for the correlation of sequential labor market decisions. Women with stronger propensity for market work have fewer children, work more before the first birth, and face larger negative effects of children. The total effect of a child remains considerable long after birth; prior birth-related reductions in labor supply account for a significant share of the total effect.     

Spousal Complementarity in Home Production

A bstract .   Economists have increasingly recognized the growing role of married women in the labor market by treating the labor supply decisions of married couples as joint decisions. However, they have yet to apply the same reasoning to home production. We build a more complete model of household time allocation that consists of a system of simultaneous equations estimating hours of labor supply and home production. Using data on white couples from Wave XXV of the Panel Study of Income Dynamics, we find that working wives act as if their husbands are substitutes for home production while other wives do not. Husbands' responses to their wives' behavior depends upon whether children are present.     

Analysis of Labour Participation Behaviour of Korean Women with Dynamic Probit and Conditional Logit*

We analyse the dynamic labour participation behaviour of Korean women. State dependence under unobserved heterogeneity is considered, where the heterogeneity may be unrelated, pseudo‐related, or arbitrarily related to regressors. Three minor methodological contributions are made: interaction terms with lagged response are allowed in dynamic conditional logit; a three‐stage algorithm for dynamic probit is proposed; and treating the initial response as fixed is shown to be ill‐advised. The state dependence is about 0.6 × SD(error), higher for the married or junior college‐educated, and lower for women in their twenties and thirties. While education increases participation, college education has negative effects for women in their forties or above. Marriage has a high negative short‐term effect but a positive long‐term effect.     

The effect of household appliances on female labor force participation: Evidence from microdata

We estimate the effect of household appliance ownership on the labor force participation rate of married women using micro-level data from the 1960 and 1970 U.S. Censuses. In order to identify the causal effect of home appliance ownership on married women's labor force participation rates, our empirical strategy exploits both time-series and cross-sectional variation in these two variables. To control for endogeneity, we instrument a married woman's ownership of an appliance by the average ownership rate for that appliance among single women living in the same U.S. state. Single women's labor force participation rates did not increase between 1960 and 1970. We find evidence in support of the hypothesis that the diffusion of household appliances contributed to the increase in married women's labor force participation rates during the 1960's.     

Structural estimation of stock market participation costs

This paper develops and estimates a dynamic model of stock market participation, where consumers' decisions regarding stock market participation are influenced by participation costs. The practical significance of the participation costs is considered as being a channel through which financial education programs can affect consumers' investment decisions. Using household data from the Panel Study of Income Dynamics, I estimate the magnitude of the participation cost, allowing for individual heterogeneity in it. The results show the average stock market participation cost is about 4–6% of labor income; however, it varies substantially over consumers' life. The model successfully predicts the level of the observed participation rate and the increasing pattern of stock market participation over the consumers' life cycle.     

Analyzing female labor supply — Evidence from a Dutch tax reform

Among OECD countries, the Netherlands has an average female labor force participation, but by far the highest rate of part-time work. This paper investigates the extent to which married women respond to financial incentives. We exploit exogenous variation caused by a substantial Dutch tax reform in 2001. Our main conclusion is that the positive significant effect of the tax reform on labor force participation dominates the negative insignificant effect on working hours. The latter contradicts the common empirical finding of positive wage elasticities. Our preferred explanation is that women respond more to changes in tax allowances than to changes in marginal tax rates.     

Social security and the labor supply of older married couples

This paper provides estimates of the impact of social security benefits on the labor force behavior of older married couples in the United States, with the ‘spouse benefit’ provision receiving particular attention. The empirical results using data from the Retirement History Survey show that the spouse benefit provision has a moderately small negative impact on labor force participation by older married women and a small positive impact on the labor force participation of older married men. The results are used to evaluate the potential labor supply impact of a proposal to eliminate spouse benefits and replace them with earnings sharing.     

Time costs,aspirations and the effect of economic growth on German fertility

Recent research has shown strong support for the model of reproductive behavior derived from the new home economics, and it is shown in this discussion that the evidence from the Federal Republic of Germany is consistent with the new home economics model. There is little support for Easterlin's relative economic hypothesis, but there is limited endorsement for model which adds the influence of experience based material aspirations to the new home economics model. Easterlin's relative income model is reviewed before directing attention to the new home economics model and an explanation of fertility movements in West Germany. The new home economics model focuses on the family division of labor between home activities and work outside the home. The marked decline in German fertility during the 1970s is mostly attributable to factors such as expanding women's earning capacities which increased the importance of 2 earner families, who have a different family division of labor and possibly preferences biased towards "quality" of children rather than numbers. Also, real wage growth lagged behind the growth in experience based aspirations, and this drop in relative income is more dramatic if it is presumed that material aspirations are based upon the family's income experienced by a young adult during his/her adolescence, rather than just the father's earnings. The mother's contribution to family income will contribute to her family's actual standard of living and the desired standard of living of her children. The labor force participation rates of married, middle-aged German women increased markedly during the 1st half of the 1950s, thus tending to enhance the increase in the standard of living desired by the young adults reaching marrying and childbearing ages in the mid-1960s. The analysis indicates that if there is not a substantial reduction in the proportion of young married women in the labor force, fertility will move countercyclically. In that there must be some floor to fertility, one should be cautious of using these parameter estimates considerably outside the 1950-1977 period. Nonetheless, the estimates indicate that economic growth will not bring a substantial rise in German fertility, and, outside the unlikely situation of sustained economic decline, fertility will remain low.     

Formal sector job growth and women’s labor sector participation : The case of Mexico

This paper looks at the effects of demand and supply on the determinants of labor sector (school, home work, informal, and formal) participation between Torreon and Tijuana, Mexico for married and single women. Comparisons between the two cities are used to capture differences in labor demand. Torreon is a traditional city with an agri-industrial base and Tijuana is a border city with large export processing (maquiladora) and tourism sectors, both of which demand female labor. Factors influencing labor supply include both individual and household characteristics. Married women, given the strong cultural tradition of working in the home, do not significantly increase their paid labor participation with higher labor demand or changing characteristics of the household. Personal characteristics have the greatest impact on labor sector participation. Single women do, however, increase their formal sector participation with additional employment opportunities and respond to household needs by moving in and out of the paid labor market. Results indicate that increases in labor demand in Mexico from the NAFTA could expand formal sector labor force participation of single women.     

The Effects of Immigration on Household Services,Labour Supply and Fertility

Fertility and female labour force participation are no longer negatively correlated in developed countries. At the same time, increased immigration affects supply and prices of household services, which are relevant to fertility and employment decisions. This paper analyses the effect of immigration on labour supply and fertility of native women in the UK. Adopting an instrumental variable approach, I find that immigration increases female labour supply without affecting fertility. My results show that immigration increases the size of the childcare sector, and reduces its prices, suggesting that immigrants may ease the trade‐off between working and child rearing among native women.     

Labor supply responses to the 1990s Japanese tax reforms

The consumption-leisure choice model implies that an exogenous change in tax rates will induce a change in labor supply. This implication is expected to be important to labor supplied by secondary earners under a progressive tax system when spousal income alters effective marginal tax rates. This paper examines labor supply responses to the income tax changes associated with Japanese tax reforms during the 1990s. The results indicate that the hours-of-work elasticity with respect to the net-of-tax rate is 0.8 for married women.     

Fertility, Labor Force Participation and the Relative Income Hypothesis:

Abstract . AN empirical test with Canadian data was made of the relative income hypothesis which states that fertility and labor force participation depend upon relative income, where relative income refers to the current family income level relative to the family's desired income level. The interpretation of the desired income level is modified slightly to mean that it is determined not by the past parental income, as originally formulated, but by contemporaneous income levels of other age groups. An empirical model of labor force participation is estimated for the post-war period. The results on the whole tend to provide empirical support for the relative income hypothesis. The post-war baby boom, which led to a decline in the income of young adults relative to that of older age groups, had the effect of increasing participation rates of young adults, especially of young (married) women.     

Fertility and female labor supply in Latin America: New causal evidence

We study the effect of fertility on maternal labor supply in Argentina and Mexico exploiting a source of exogenous variability in family size first introduced by Angrist and Evans [Angrist, J., Evans, W., 1998. Children and their parents' labor supply: evidence from exogenous variation in family size. American Economic Review 88 (3), 450–577] for the United States. We find that the estimates for the US can be generalized both qualitatively and quantitatively to the populations of two developing countries where, compared to the US, fertility is known to be higher, female education levels are much lower and there are fewer formal facilities for childcare.     

Parenthood and the earnings of married men and women

We use longitudinal data to examine the relationship between parenthood, wages, and hours worked for married men and women. We find evidence of negative selection into parenthood, substantial child-related reallocations of time within the household, and heterogeneity in the effects of children on household behavior. In households in which the wife experiences an interruption in employment, mothers' wages and hours worked fall, while fathers' hours and wages increase. In households in which the mother remains continuously attached to the labor force, however, there is no evidence of a wage decline for mothers, and the hours worked by fathers decrease substantially.     

Labor Supply Effects of Federal Rental Subsidies

Federal rental subsidies appear to create disincentives for work through marginal taxes on earnings, income effects, and requirements that nonrecipients on waiting lists maintain low incomes in order to remain eligible. This paper takes advantage of the rationing of housing subsidies by identifying labor supply effects using analytic methods that could not be validly applied to unrationed programs. It finds that subsidies substantially reduce hours worked and labor force participation among recipients.     

Can progressive taxation account for cross-country variation in labor supply?

The difference between average hours worked in the US and average hours worked in Continental European countries has been increasing since the early 1970s. To explain this phenomenon, this paper develops an endogenous growth model with two key properties: agents are heterogeneous in their rates of time preference and labor skills, and the model incorporates progressive income taxes. The model is calibrated to US and German data for the periods 1971-1974 and 1986-1989. Our findings suggest that the degree of progressivity is a major factor in explaining the patterns of the US and German labor supply over time. Predictions of the model also match the distributional trends in both countries during this time period.     

Increasing the credibility of the twin birth instrument

Twin births are an important instrument for the endogenous fertility decision. However, twin births are not exogenous either as dizygotic twinning is correlated with maternal characteristics. Following the medical literature, we assume that monozygotic twins are exogenous, and construct a new instrument, which corrects for the selection although monozygotic twinning is usually unobserved in survey and administrative datasets. Using administrative data from Sweden, we show that the usual twin instrument is related to observed and unobserved determinants of economic outcomes, while our new instrument is not. In our applications we find that the classical twin instrument underestimates the negative effect of fertility on labor income. This finding is in line with the observation that high earners are more likely to delay childbearing and hence have a higher risk to get dizygotic twins.     

A closed-form solution for the continuous-time consumption model with endogenous labor income

In this paper, we study the consumption, labor supply, and portfolio decisions of an infinitely lived individual who receives a certain wage rate and income from investment into a risky asset and a risk-free bond. Uncertainty about labor income arises endogenously, because labor supply evolves randomly over time in response to changes in financial wealth. We derive closed-form solutions for optimal consumption, labor supply and investment strategy. We find that deferring the retirement age stimulates optimal consumption over time and discourages optimal labor supply during the working life. We also find explicitly that optimal portfolio allocation becomes more ‘conservative’ when the individual approaches his prescribed retirement age. The effects of risk-aversion coefficients on optimal decisions are examined.     

Heterogeneity and long-run changes in aggregate hours and the labor wedge

From 1961 to 2007, U.S. aggregate hours worked increased and the labor wedge—measured as the discrepancy between a representative household׳s marginal rate of substitution and the marginal product of labor—declined substantially. The labor wedge is negatively related to hours and is often attributed to labor income taxes. However, U.S. labor income taxes increased since 1961. We examine a model with gender and marital status heterogeneity which accounts for the trends in the U.S. hours and the labor wedge. Apart from taxes, the model׳s labor wedge reflects non-distortionary cross-sectional differences in households׳ hours worked and productivity. We provide evidence that household heterogeneity is important for long-run changes in labor wedges and hours in other OECD economies.