Outline for ECON 753 at UMass(1)
Outline for ECON 753 at UMass(1)
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Date Created: 02/06/15
Applied Econometrics Labor Econometrics Michael Ash Econ 753 Labor Econometrics 7 p 112 Outline of Presentation Threeday plan 1 Wage models 2 Labor demand the employment effect of the minimum wage 3 Labor supply 39 Why study labor supply 0 Analysis of tax and transfer policy 39 Labor supply and the Earned Income Tax Credit Labor Econometrics 7 p212 Basic Issues in Labor Supply 39 Participation and hours 0 Structural models 39 Quasiexperimental models 0 Constrained demand addedworkerdiscouragedworker Labor Econometrics 7 p312 Structural models of labor supply 39 Consumptionnonmarkettime model mXUxH subject tox Y erH 39 Wage changes offsetting income and substitution effects Basic Empirical Labor Supply Specification H od7BwZys 39 Criticisms 0 Unobserved heterogeneity systematic overestimate of labor supply elasticity people with high wage may have high unobserved propensity to work 0 Wage unobserved for nonparticipants 0 Male chauvinist second earner models 0 Family utility models unitary bargaining I Labor Econometrics 7 p412 Kinked budget constraint models Concave and convex kinks as a result of taxes and transfers or fixed costs ofjobholding 39 Progressive income tax 39 Phaseout region of transfer programs Fixedcost of employment 39 CBC vs LBC estimation Labor Econometrics 7 p512 Empirical Speci cations and Results 0 Female labor supply estimates male labor supply elasticity found to be low 39 Hausman results 39 Mroz survey Berndt Table 112 p 638 0 Change in annual hours for 1 change in wage rate1000 change in income 0 Wide range of estimates including negative of laborsupply elasticity 0 Sensitive to wage endogeneity Labor Econometrics 7 p612 EMU hulwhn39h l nnnLah r mm of lth and Inhnr and n l39vll39l39Ku39 r39uuvmzal Ln rum M1119 and I39J INNfl rsp11 The mm u l39u lmI 541T SifWJ Ell I39Tu39 Labor Econometrics 7 p712 I Mroz Survey Table 112 MROZ S Survey of Estimates of Married Woman39s Labor Suppl r Responses Siudy Estirrm lionx Mclhmj Wagi li ec Income Effec Bush 113273 lnerumchtal variables 3quot 161 Hogan 93011 T calm HM 323 Fugim 93031 Infill u mcn lal Vfdi39ii lcb 31quot I 17 Engan h 39l39mhit 32 422 Hogan J WHUh xed 40553 I39E39J39t Pagan 1 I981 Fixed emu 39391 39124 Urccnhajgh WSU Inslrut nmwl variabkcs ll 51 i lzmsmnn mam onvcx hudg sets 32 v 1130 Hangman 1193111 Noncum39ux budget lms 335 1 HM l ausmun l 193m Fixed costs EDS 1 EM Heckman W765i Tuhil I462 H4 IIL39Lfkma n Wfoa Gmer iimd Tobil 490 5 1 il Hacknmn Wm Gcncrajjzcd Tohil I410 IRS Luffam 1 HI 9311 39Ihbit 12 J 551 Lanyard 1 al IEPSH lnmrumenmi varialakes 22 Lcuthnld I978 I M cslimalcs E4 311 lxuthul J WEI WM estimates 45 TH Leuthnld INFJ 9 estimates 33 58 Nakamum and cms alizud Tubi39l lb I 50 Wakmrmm WE Iii Schultz 1 93H Tubil 123 371 5thqu IEJEUI Instmmm ttal vun uhlcs 2 19 I 4 quotI39ruiv Tmms HTch an EHIIJIJLRE J all A ml e39s wng I 5 39ri wu m39s lulu 3 SELI hln mm RAFT ul 5701 Izu larrzlquot ham 1 I Empirical Speci cations and Results 39 Mroz study Panel Study of Income Dynamics 1975 the small income and wage effects found in this study provide a much more accurate picture of the behavioral responses of working women to variations in nonlabor income and wage than those found in most previous studies 0 Labor supply elasticity similar to that of men 0 Limited role of sample selectivity bias 0 Unobserved taste for work is a significant omitted variable affecting current and past particpation and hours 0 the influence of taxes on the estimates of the labor supply parameters appears to be at most a second order effect Labor Econometrics 7 p812 Eissa and Liebman Earned Income Tax Credit 39 Enacted 1975 expanded in 1986 1990 and 1993 9 34 B 19 M recipients largest means tested cash transfer program 39 Current 2003 parameters unmarried with two or more children 0 040 credit per earned 100 up to 10500 earned income credit of 4204 0 Flat credit of 4204 for earned income between 10500 and 13500 0 Credit reduced by 021 per earned 100 until credit is zero at earned income of 34000 0 Different parameters for onechild married families and much smaller for workers without children 39 E and L 1987 Expansion TRA86 39 Definition of treatment and comparison groups Labor Econometrics 7 p912 Eissa and Liebman Quality of the comparison groups Quantity effects participation and hours 0 What about wage effects Labor Econometrics 7 p 1012 i I Eissa and Liebman mm 11 mo Fem Pmmcum now mm or Ummmn Wmmx Dirremmq mTRAM mamas Di emnm differences m 2 a m A Mmequot gnmp th children 0729 m mm 0753 m mm 0024 mm 20st Cnmml graup anhunc hildran o 952 m cm 0952 man 0 mm m m2 924 m we 46287 a 7mmquot group Less man high mhml wLh chzldmn 0479 0 mm o m mum n ms mm 153m Conlml gmnp 1 Less than high mm WILth chum o 794 uman o 761 1009 u us 10 om 0041 a 0191 mass Comm gmup 2 Beynud high mum Wm Children 0 9n 0 mm 0920 00051 0ch 10mm 47009 m 015 r5712 0 1mm gmup my uth my children mm Mom 0 78701006 0 023 was 9702 Dantml gmnp L mg hm wmmuL mm 0945 mm 0943 40003 70002 0004 09251 009 16577 Eumml gnmp 2 Beyond high mm with children a 911 mans am a ush was 0007 a 014 a am 5712 meEcummm 7mm 39 Closing Remarks on Labor Supply 0 No model of labor demand except via wage and nonclearing markets 0 Limited literature on Wage Squeeze 0 Gender family literature Labor Econometrics 7 p 1212
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