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Much ado about nothing: conditional logit vs. random coefficient models for estimating labour supply elasticities

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  • Peter Haan

Abstract

This study compares several specifications of discrete choice labour supply estimations on basis of the German Socio Economic Panel. The results suggest that despite the restrictive assumptions of the error terms the conditional logit model provides an adequate model choice for the analysis of labour supply functions. Significance tests, which are based on bootstrapped confidence intervals, show that labour supply elasticities derived within the conditional logit model do not significantly differ from elasticities derived in flexible random coefficient models.

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  • Peter Haan, 2006. "Much ado about nothing: conditional logit vs. random coefficient models for estimating labour supply elasticities," Applied Economics Letters, Taylor & Francis Journals, vol. 13(4), pages 251-256.
    • Handle: RePEc:taf:apeclt:v:13:y:2006:i:4:p:251-256
    DOI: 10.1080/13504850500396348
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    1. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
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    3. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387, January.
    4. Viktor Steiner & Katharina Wrohlich, 2004. "Household Taxation, Income Splitting and Labor Supply Incentives – A Microsimulation Study for Germany," CESifo Economic Studies, CESifo Group, vol. 50(3), pages 541-568.
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