Labour supply: a review of alternative approaches

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. Abstract This chapter surveys existing approaches to modeling labor supply and identi®es important gaps in the literature that could be addressed in future research. The discussion begins with a look at recent policy reforms and labor market facts that motivate the study of labor supply. The analysis then presents a unifying framework that allows alternative empirical formulations of the labor supply model to be compared and their resulting elasticities to be interpreted. This is followed by critical reviews of alternative approaches to labor-supply modeling. The ®rst review assesses the differencein-differences approach and its relationship to natural experiments. The second analyzes estimation with non-linear budget constraints and welfare-program participation. The third appraises developments of family labor-supply models including both the standard unitary and collective labor-supply formulations. The fourth brie¯y explores dynamic extensions of the labor supply model, characterizing how participation decisions, learning-by-doing, human capital accumulation and habit formation affect the analysis of the lifecycle model. At the end of each of the four broad reviews, we summarize a selection of the recent empirical ®ndings. The concluding section asks whether the developments reviewed in this chapter place us in a better position to answer the policy-reform questions and to interpret the trends in participation and hours with which we began this review. q Terms of use: Documents in

Using Elasticities to Derive Optimal Income Tax Rates

“…As most, though not all, empirical studies find small income effects relative to substitution effects (see e.g. Blundell and MaCurdy (1999)), it is useful to consider the case with no income effects. Therefore, in the simulations, I use two types of utility functions with constant elasticities.…”

Retrenchments in Unemployment Insurance Benefits and Wage Inequality: Longitudinal Evidence from the Netherlands, 1985-2000

“…Comparing the wages before and after the UI reform for the treatment group reflects the re-employment wage change under the influence of the exogenous shock. The control group instead reflects the wages under the influence of changes in the labour market conditions only (Blundell and McCurdy, 1999).…”

Revisiting the Supply-Side Effects of Government Spending Under Incomplete Markets

“…25 23 Preferences that give rise to this labor supply are ut = c ζc t − n ζn t , for appropriate ζc, ζn. 24 See, for example, Hausman (1981), MaCurdy (1981), and Blundell and MaCurdy (1999). 25 Note that the specification of aggregate consumption considered in Campbell and Mankiw coincides with the one implied by our model.…”