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Nonparametric Estimation of Labor Supply and Demand Factors

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  • Okumura, Tsunao

Abstract

This article derives sharp bounds on labor supply and demand shift variables within a nonparametric simultaneous equations model using only observations of the intersection of upward sloping supply curves and downward sloping demand curves. Furthermore, I demonstrate that these bounds tighten with the imposition of plausible assumptions on the distribution of the disturbance terms. Using Katz and Murphy's (1992) panel data on wages and labor inputs, I estimate these bounds and assess the supply and demand factors that determine changes within male--female wage differentials and the college wage premium.
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  • Okumura, Tsunao, 2011. "Nonparametric Estimation of Labor Supply and Demand Factors," Journal of Business & Economic Statistics, American Statistical Association, vol. 29(1), pages 174-185.
    • Handle: RePEc:bes:jnlbes:v:29:i:1:y:2011:p:174-185
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    1. Kevin M. Murphy & Finis Welch, 1992. "The Structure of Wages," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 285-326.
    2. Arthur Lewbel, 2012. "Using Heteroscedasticity to Identify and Estimate Mismeasured and Endogenous Regressor Models," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 30(1), pages 67-80.
    3. Charles F. Manski, 1997. "Monotone Treatment Response," Econometrica, Econometric Society, vol. 65(6), pages 1311-1334, November.
    4. Ivar Ekeland & James J. Heckman & Lars Nesheim, 2004. "Identification and Estimation of Hedonic Models," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 60-109, February.
    5. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 35-78.
    6. Sims,Christopher A. (ed.), 1994. "Advances in Econometrics," Cambridge Books, Cambridge University Press, number 9780521444606, September.
    7. Richard Blundell & Amanda Gosling & Hidehiko Ichimura & Costas Meghir, 2007. "Changes in the Distribution of Male and Female Wages Accounting for Employment Composition Using Bounds," Econometrica, Econometric Society, vol. 75(2), pages 323-363, March.
    8. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555, Elsevier.
    9. Matzkin, Rosa L., 2007. "Nonparametric identification," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 73, Elsevier.
    10. Kevin M. Murphy & W. Craig Riddell & Paul M. Romer, 1998. "Wages, Skills, and Technology in the United States and Canada," NBER Working Papers 6638, National Bureau of Economic Research, Inc.
    11. Charles F. Manski & John V. Pepper, 2000. "Monotone Instrumental Variables, with an Application to the Returns to Schooling," Econometrica, Econometric Society, vol. 68(4), pages 997-1012, July.
    12. Blau, Francine D & Kahn, Lawrence M, 1997. "Swimming Upstream: Trends in the Gender Wage Differential in 1980s," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 1-42, January.
    13. Donald J. Brown & Rosa L. Matzkin, 1998. "Estimation of Nonparametric Functions in Simultaneous Equations Models, with an Application to Consumer Demand," Cowles Foundation Discussion Papers 1175, Cowles Foundation for Research in Economics, Yale University.
    14. Blau, Francine D. & Kahn, Lawrence M., 1999. "Institutions and laws in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 25, pages 1399-1461, Elsevier.
    15. Roberto Rigobon, 2003. "Identification Through Heteroskedasticity," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 777-792, November.
    16. Rosa L. Matzkin, 2008. "Identification in Nonparametric Simultaneous Equations Models," Econometrica, Econometric Society, vol. 76(5), pages 945-978, September.
    17. repec:dau:papers:123456789/6486 is not listed on IDEAS
    18. Sims,Christopher A. (ed.), 1994. "Advances in Econometrics," Cambridge Books, Cambridge University Press, number 9780521444590, September.
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    Cited by:

    1. Tsunao Okumura & Emiko Usui, 2014. "Concave‐monotone treatment response and monotone treatment selection: With an application to the returns to schooling," Quantitative Economics, Econometric Society, vol. 5, pages 175-194, March.
    2. Santeramo, Fabio Gaetano, 2014. "On the Estimation of Supply and Demand Elasticities of Agricultural Commodites," MPRA Paper 56126, University Library of Munich, Germany.

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