ERIC Number: ED105027
Record Type: RIE
Publication Date: 1973-Dec
Reference Count: 0
Estimating Labor Supply Response: A Sensitivity Analysis.
DaVanzo, Julie; And Others
The central issue of this report is the wide range of parameter estimates of labor supply responses produced by previous econometric studies based on cross sectional data. Considerable public and private debate as to how the existing welfare system should be reformed has fostered renewed study of how welfare related government policies affect people's behavior, particularly how different welfare reform proposals would alter the division of time between market work and other activities. The task undertaken here is a sensitivity analysis of the different methods and formulations by which researchers have previously estimated labor supply responses. The approach taken is a step-by-step exploration of alternative labor supply estimating equatios that attempts to identify the independent (marginal) effect of each particular change in the form of these equations. The sensitivity of response parameters to changes in the measure of market labor supply by an individual to changes in the way an individual's wage is measured, to how non-wage related income effects are estimated, and to who is included in the estimating sample is considered. By systematically exploring what difference each of these changes makes to the parameter estimates, it is possible to isolate which factors strongly affect estimated response parameters. (Author/JM)
Publication Type: Reports - Research
Education Level: N/A
Sponsor: Office of Economic Opportunity, Washington, DC.
Authoring Institution: Rand Corp., Santa Monica, CA.
Note: A number of illustrative tables may not be clearly legible due to the print size in the original document