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Slowly, but Changing: How Does Genuine State Dependence Affect Female Labor Supply on the Extensive and Intensive Margin

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  • Peter Haan

    (DIW, Berlin)

Abstract

In this paper I develop an intertemporal discrete choice model of female labor supply that allows to analyze state dependence and labor supply along the extensive and the intensive margin. Drawing on microsimulation the nonlinearities in the household budget set are captured and thus work incentives of both spouses can be accurately described. Unobserved heterogeneity is modeled nonparametrically and the initial conditions problem is explicitly accounted for. The estimation results show that state dependence is significantly positive at the extensive margin, yet modest on the intensive margin. Using the Markov chain property, I analyze the dynamics of labor supply behavior. I find that labor supply elasticities on both margins differ significantly between the short and long run.

Suggested Citation

  • Peter Haan, 2006. "Slowly, but Changing: How Does Genuine State Dependence Affect Female Labor Supply on the Extensive and Intensive Margin," JEPS Working Papers 06-002, JEPS.
    • Handle: RePEc:jep:wpaper:06002
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    Cited by:

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    2. Matteo Richiardi & Ambra Poggi, 2014. "Imputing Individual Effects in Dynamic Microsimulation Models. An application to household formation and labour market participation in Italy," International Journal of Microsimulation, International Microsimulation Association, vol. 7(2), pages 3-39.
    3. Peter Haan & Arne Uhlendorff, 2013. "Intertemporal labor supply and involuntary unemployment," Empirical Economics, Springer, vol. 44(2), pages 661-683, April.
    4. Nisar Ahmad, 2014. "State Dependence in Unemployment," International Journal of Economics and Financial Issues, Econjournals, vol. 4(1), pages 93-106.

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    More about this item

    Keywords

    Genuine state dependence; labor supply of married women; panel data; unobserved heterogeneity; microsimulation;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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