Working Papers in Economics
Lennart Flood, Jörgen Hansen
Household Labor Supply and Welfare Participation in Sweden
() and Roger Wahlberg
Abstract: Using a sample of Swedish households, we estimate a
household labor supply model assuming that preferences for consumption and
leisure can be described by a direct translog utility function. The labor
supply and welfare participation decisions are treated as a discrete choice
problem, and we assume that these choices follow a simple conditional logit
rule. In addition, we allow unobserved individual- specific effects to be
correlated across alternatives. We assume that these unobserved effects are
drawn from a discrete distribution, and the correlation across alternatives
is modeled using factor-loading techniques. Classification error in hours
is allowed for by using a multiplicative measurement error specification.
The estimates from the structural model yield inelastic labor supply among
husbands and positive wage elasticity for wives. Further, the cross
elasticities are close to zero.
Keywords: Labor Supply; Welfare Participation; Unobserved Heterogeneity; Factor Loading; Tax Simulation.; (follow links to similar papers)
JEL-Codes: J22; (follow links to similar papers)
27 pages, November 28, 1999
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