IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/22920.html
   My bibliography  Save this paper

Labor Supply Elasticities: Overcoming Nonclassical Measurement Error Using More Accurate Hours Data

Author

Listed:
  • Garry Barrett
  • Daniel S. Hamermesh

Abstract

We measure the impact of measurement error in labor-supply elasticities estimated over recalled usual work hours, as is ubiquitous in the literature. Employing hours of work in diaries collected by the American Time Use Survey, 2003-12, along with the same respondents’ recalled usual hours, we show that the latter yield elasticities that are positively biased. We argue that this bias arises from the salience on recalled hours of differences in wage rates.

Suggested Citation

  • Garry Barrett & Daniel S. Hamermesh, 2016. "Labor Supply Elasticities: Overcoming Nonclassical Measurement Error Using More Accurate Hours Data," NBER Working Papers 22920, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:22920
    Note: LS
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w22920.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Laurens Cherchye & Bram De Rock & Frederic Vermeulen, 2012. "Married with Children: A Collective Labor Supply Model with Detailed Time Use and Intrahousehold Expenditure Information," American Economic Review, American Economic Association, vol. 102(7), pages 3377-3405, December.
    2. Olivier Bargain & Kristian Orsini & Andreas Peichl, 2014. "Comparing Labor Supply Elasticities in Europe and the United States: New Results," Journal of Human Resources, University of Wisconsin Press, vol. 49(3), pages 723-838.
    3. Hamermesh, Daniel S, 1998. "When We Work," American Economic Review, American Economic Association, vol. 88(2), pages 321-325, May.
    4. Dominique Goux & Eric Maurin & Barbara Petrongolo, 2014. "Worktime Regulations and Spousal Labor Supply," American Economic Review, American Economic Association, vol. 104(1), pages 252-276, January.
    5. Richard Blundell & Luigi Pistaferri & Itay Saporta-Eksten, 2016. "Consumption Inequality and Family Labor Supply," American Economic Review, American Economic Association, vol. 106(2), pages 387-435, February.
    6. Eric French, 2004. "The Labor Supply Response to (Mismeasured but) Predictable Wage Changes," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 602-613, May.
    7. Bound, John & Brown, Charles & Mathiowetz, Nancy, 2001. "Measurement error in survey data," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 59, pages 3705-3843, Elsevier.
    8. Michael P. Keane, 2011. "Labor Supply and Taxes: A Survey," Journal of Economic Literature, American Economic Association, vol. 49(4), pages 961-1075, December.
    9. Juster, F Thomas & Stafford, Frank P, 1991. "The Allocation of Time: Empirical Findings, Behavioral Models, and Problems of Measurement," Journal of Economic Literature, American Economic Association, vol. 29(2), pages 471-522, June.
    10. Pencavel, John, 1987. "Labor supply of men: A survey," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 1, pages 3-102, Elsevier.
    11. Tess M. Stafford, 2015. "What Do Fishermen Tell Us That Taxi Drivers Do Not? An Empirical Investigation of Labor Supply," Journal of Labor Economics, University of Chicago Press, vol. 33(3), pages 683-710.
    12. George A. Akerlof & Janet L. Yellen, 1985. "Unemployment Through the Filter of Memory," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 100(3), pages 747-773.
    13. Bound, John & Brown, Charles & Duncan, Greg J & Rodgers, Willard L, 1994. "Evidence on the Validity of Cross-Sectional and Longitudinal Labor Market Data," Journal of Labor Economics, University of Chicago Press, vol. 12(3), pages 345-368, July.
    14. George J. Borjas, 1980. "The Relationship between Wages and Weekly Hours of Work: The Role of Division Bias," Journal of Human Resources, University of Wisconsin Press, vol. 15(3), pages 409-423.
    15. Daniel S. Hamermesh & Harley Frazis & Jay Stewart, 2005. "Data Watch: The American Time Use Survey," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 221-232, Winter.
    16. Orazio P. Attanasio & Luigi Pistaferri, 2016. "Consumption Inequality," Journal of Economic Perspectives, American Economic Association, vol. 30(2), pages 3-28, Spring.
    17. repec:hal:pseose:halshs-00943036 is not listed on IDEAS
    18. Olivier Bargain & Kristian Orsini & Andreas Peichl, 2012. "Comparing Labor Supply Elasticities in Europe and the US: New Results," SOEPpapers on Multidisciplinary Panel Data Research 525, DIW Berlin, The German Socio-Economic Panel (SOEP).
    19. Duncan, Greg J & Hill, Daniel H, 1985. "An Investigation of the Extent and Consequences of Measurement Error in Labor-Economic Survey Data," Journal of Labor Economics, University of Chicago Press, vol. 3(4), pages 508-532, October.
    20. Christopher D. Carroll & Thomas F. Crossley & John Sabelhaus, 2015. "Improving the Measurement of Consumer Expenditures," NBER Books, National Bureau of Economic Research, Inc, number carr11-1.
    21. Carroll, Christopher D. & Crossley, Thomas F. & Sabelhaus, John (ed.), 2015. "Improving the Measurement of Consumer Expenditures," National Bureau of Economic Research Books, University of Chicago Press, number 9780226126654, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. George J. Borjas & Anthony Edo, 2021. "Gender, Selection into Employment, and the Wage Impact of Immigration," NBER Working Papers 28682, National Bureau of Economic Research, Inc.
    2. Cheng Chou & Ruoyao Shi, 2020. "Utilizing Two Types of Survey Data to Enhance the Accuracy of Labor Supply Elasticity Estimation," Working Papers 202018, University of California at Riverside, Department of Economics.
    3. Loukas Karabarbounis & Jeremy Lise & Anusha Nath, 2022. "Minimum Wages and Labor Markets in the Twin Cities," NBER Working Papers 30239, National Bureau of Economic Research, Inc.
    4. Song, Jia & Cheng, Terence C., 2020. "How do gender differences in family responsibilities affect doctors' labour supply? Evidence from Australian panel data," Social Science & Medicine, Elsevier, vol. 265(C).
    5. Cheng Chou & Ruoyao Shi, 2021. "What time use surveys can (and cannot) tell us about labor supply," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 36(7), pages 917-937, November.
    6. Coniglio, Nicola D. & Hoxhaj, Rezart & Jayet, Hubert, 2019. "On the road to integration? Immigrant’s demand for informal (& formal) education," GLO Discussion Paper Series 389, Global Labor Organization (GLO).
    7. Lusi Liao & Sasiwimon Warunsiri Paweenawat, 2021. "The inversion of married women's labour supply and wage: Evidence from Thailand," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 35(1), pages 82-98, May.
    8. Borjas, George J. & Hamermesh, Daniel S., 2023. "The Mismeasurement of Work Time: Implications for Wage Discrimination and Inequality," IZA Discussion Papers 16699, Institute of Labor Economics (IZA).
    9. Gibney, Victoria Hunter & West, Kristine L. & Gershenson, Seth, 2022. "Blurred Boundaries: A Day in the Life of a Teacher," IZA Discussion Papers 15548, Institute of Labor Economics (IZA).
    10. Heath,Rachel & Mansuri,Ghazala & Rijkers,Bob & Seitz,William Hutchins & Sharma,Dhiraj, 2020. "Measuring Employment : Experimental Evidence from Urban Ghana," Policy Research Working Paper Series 9263, The World Bank.
    11. Lusi Liao & Sasiwimon Warunsiri Paweenawat, 2018. "Labour Supply of Married Women in Thailand: 1985–2016," PIER Discussion Papers 88, Puey Ungphakorn Institute for Economic Research.
    12. Gimenez-Nadal, José Ignacio & Sevilla, Almudena, 2022. "Work Effort in the UK: Trends and Explanations," IZA Discussion Papers 15329, Institute of Labor Economics (IZA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Richard Blundell & Luigi Pistaferri & Itay Saporta-Eksten, 2018. "Children, Time Allocation, and Consumption Insurance," Journal of Political Economy, University of Chicago Press, vol. 126(S1), pages 73-115.
    2. Alexander Bick & Adam Blandin & Richard Rogerson, 2022. "Hours and Wages," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(3), pages 1901-1962.
    3. Pottier, Antonin, 2022. "Expenditure elasticity and income elasticity of GHG emissions: A survey of literature on household carbon footprint," Ecological Economics, Elsevier, vol. 192(C).
    4. Löffler, Max & Peichl, Andreas & Siegloch, Sebastian, 2013. "Validating Structural Labor Supply Models," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79819, Verein für Socialpolitik / German Economic Association.
    5. Klára Kalíšková, 2020. "Tax and transfer policies and the female labor supply in the EU," Empirical Economics, Springer, vol. 58(2), pages 749-775, February.
    6. Sam Cosaert & Alexandros Theloudis & Bertrand Verheyden, 2023. "Togetherness in the Household," American Economic Journal: Microeconomics, American Economic Association, vol. 15(1), pages 529-579, February.
    7. Theloudis, Alexandros, 2021. "Consumption inequality across heterogeneous families," European Economic Review, Elsevier, vol. 136(C).
    8. Choonsung Park, 2020. "Consumption, Reservation Wages, and Aggregate Labor Supply," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 37, pages 54-80, July.
    9. Giacomo De Giorgi & Luca Gambetti & Costanza Naguib, 2023. "Life-Cycle Inequality: the Black and White Differential," Diskussionsschriften dp2301, Universitaet Bern, Departement Volkswirtschaft.
    10. Jorge González-Chapela, 2007. "On the Price of Recreation Goods as a Determinant of Male Labor Supply," Journal of Labor Economics, University of Chicago Press, vol. 25(4), pages 795-824.
    11. John C. Ham & Kevin T. Reilly, 2002. "Testing Intertemporal Substitution, Implicit Contracts, and Hours Restriction Models of the Labor Market Using Micro Data," American Economic Review, American Economic Association, vol. 92(4), pages 905-927, September.
    12. Chiappori, Pierre-André & Gimenez-Nadal, José Ignacio & Molina, José Alberto & Theloudis, Alexandros & Velilla, Jorge, 2020. "Intrahousehold Commitment and Intertemporal Labor Supply," IZA Discussion Papers 13545, Institute of Labor Economics (IZA).
    13. Abay, Kibrom A. & Abate, Gashaw T. & Barrett, Christopher B. & Bernard, Tanguy, 2019. "Correlated non-classical measurement errors, ‘Second best’ policy inference, and the inverse size-productivity relationship in agriculture," Journal of Development Economics, Elsevier, vol. 139(C), pages 171-184.
    14. Daniele Checchi & Cecilia García-Peñalosa & Lara Vivian & Cecilia Garcia-Peñalosa, 2022. "Hours Inequality," CESifo Working Paper Series 10128, CESifo.
    15. Karine Briard, 2020. "L’élasticité de l’offre de travail des femmes en France. Petite revue de méthodes et de résultats," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(5), pages 39-72.
    16. Blundell, R. & French, E. & Tetlow, G., 2016. "Retirement Incentives and Labor Supply," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 457-566, Elsevier.
    17. Battistin, Erich & De Nadai, Michele & Krishnan, Nandini, 2023. "The insights and illusions of consumption measurements," Journal of Development Economics, Elsevier, vol. 161(C).
    18. John Pencavel, 2016. "Whose Preferences Are Revealed In Hours Of Work?," Economic Inquiry, Western Economic Association International, vol. 54(1), pages 9-24, January.
    19. Robin Jessen & Johannes König, 2023. "Hours risk and wage risk: repercussions over the life cycle," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(4), pages 956-996, October.
    20. Bredemeier, Christian & Gravert, Jan & Juessen, Falko, 2021. "Accounting for Limited Commitment between Spouses When Estimating Labor-Supply Elasticities," IZA Discussion Papers 14226, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:22920. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.