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Marginal compensated effects in discrete labor supply models

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  • Dagsvik, John K.
  • Strøm, Steinar
  • Locatelli, Marilena

Abstract

This paper develops analytic results for marginal compensated effects in discrete labor supply models, including a Slutsky equation. The Slutsky equation is aggregate in the sense that it establishes the relationship between the marginal compensated effects of the probability of working and the mean hours of work in terms of the corresponding marginal uncompensated effects. The Slutsky equation differs somewhat from the Slutsky equation in the standard continuous labor supply models. Specifically, the marginal compensated effect of an increase in the wage rate differs from the corresponding effect of a decrease in the wage rate.

Suggested Citation

  • Dagsvik, John K. & Strøm, Steinar & Locatelli, Marilena, 2021. "Marginal compensated effects in discrete labor supply models," Journal of choice modelling, Elsevier, vol. 41(C).
    • Handle: RePEc:eee:eejocm:v:41:y:2021:i:c:s1755534521000592
    DOI: 10.1016/j.jocm.2021.100326
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    Cited by:

    1. Hanson, Torbjørn & Lindgren, Petter Y., 2019. "No country for old men? Increasing the retirement age in the Armed Forces," MPRA Paper 95917, University Library of Munich, Germany.
    2. John K. Dagsvik & Steinar Strom, 2022. "Aggregate marginal costs of public funds," Public Sector Economics, Institute of Public Finance, vol. 46(2), pages 239-260.
    3. John K. Dagsvik, 2020. "Marginal compensated effects and the slutsky equation for discrete choice models," Discussion Papers 930, Statistics Norway, Research Department.

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    More about this item

    Keywords

    Marginal compensated effects; Slutsky equations; Discrete choice labor supply;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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