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Estimation of the Wage and Employment Equation Model on Urban Labor Market by the Simultaneous Maximum Likelihood Method

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  • Xiao Du
  • Zhang Hao

Abstract

This paper estimates wage and employment equation model on urban labor market by the simultaneous maximum likelihood method with CHIP-2002. The results show- human capital, personal ability and father’s education background of a person will affect his/her market wage; Partner’s income and preschool children have a negative effect on female employment probability but have no effect on male employment probability; Female return rate to education is 9.65% and employment elasticity to wage is 1.27; Male return rate to education is 5.93% and employment elasticity to wage is 0.45; Conventional Heckman two step procedure and Probit MLE underestimate the return rate to education and employment elasticity to wage.

Suggested Citation

  • Xiao Du & Zhang Hao, 2017. "Estimation of the Wage and Employment Equation Model on Urban Labor Market by the Simultaneous Maximum Likelihood Method," International Journal of Business and Management, Canadian Center of Science and Education, vol. 12(4), pages 231-231, March.
    • Handle: RePEc:ibn:ijbmjn:v:12:y:2017:i:4:p:231
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    References listed on IDEAS

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    1. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492, National Bureau of Economic Research, Inc.
    2. Blundell, Richard & Smith, Richard J., 1994. "Coherency and estimation in simultaneous models with censored or qualitative dependent variables," Journal of Econometrics, Elsevier, vol. 64(1-2), pages 355-373.
    3. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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