Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192839 
Year of Publication: 
2017
Series/Report no.: 
Discussion Papers No. 857
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
When the budget set is non-convex the application of the Hausman approach to estimate labor supply functions will in general be cumbersome because labor supply no longer depends solely on marginal criteria (first order conditions). In this paper we demonstrate that the conventional continuous labor supply model (including corner solution for non-participation) with non-convex budget sets in some cases can be estimated using only first order conditions provided the budget curve is continuously differentiable and the utility function belongs to a particular class. We subsequently discuss how the model can be specified econometrically. Finally, we discuss the application of the model to simulate the effect of counterfactual reforms.
Subjects: 
Labor supply
non-convex budget sets
marginal criteria
JEL: 
C51
J22
Document Type: 
Working Paper

Files in This Item:
File
Size
961.4 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.