Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/34564 
Year of Publication: 
2007
Series/Report no.: 
IZA Discussion Papers No. 2888
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
In this paper we develop a model to consistently estimate the intertemporal labor supply behavior on the extensive margin (participation decision) and the intensive margin (working hours decision). In this framework we distinguish between voluntary non-participation and involuntary unemployment which is caused by labor market rationing and model the dynamics of labor supply by accounting for true state dependence and unobserved effects. Our approach follows the empirical literature on life cycle employment based on approximate decision rules. However, in contrast to previous studies, this framework allows us to test for true state dependence of voluntary non-participation, involuntary unemployment, full-time work and over-time work. Moreover, we derive consistent estimates of intertemporal labor supply elasticities over time and asses the bias of short- and long-run elasticities derived in a pure choice model of labor supply.
Document Type: 
Working Paper

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