Abstract
We show how non-parametric flexibility can be attained in a structural labour supply model that can be used to analyse all sorts of (non-linear) tax and benefits reforms. The direct utility function is approximated with a series expansion. For given length of the expansion, the model is estimated by smooth simulated maximum likelihood, using Dutch data on labour supply of married females. Estimates of own and cross wage elasticities and tax reform effects suggest that a series expansion of order two is enough. Monte Carlo simulations show that the estimator performs very well, unless there is measurement error in the hours variable.
| Original language | English |
|---|---|
| Pages (from-to) | 345-374 |
| Number of pages | 30 |
| Journal | Journal of Econometrics |
| Volume | 107 |
| Issue number | 1-2 |
| DOIs | |
| Publication status | Published - Mar 2002 |
| Externally published | Yes |
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A structural labour supply model with flexible preferences. / van Soest, Arthur; Das, Marcel; Gong, Xiaodong.
In: Journal of Econometrics, Vol. 107, No. 1-2, 03.2002, p. 345-374.Research output: Contribution to journal › Article
TY - JOUR
T1 - A structural labour supply model with flexible preferences
AU - van Soest, Arthur
AU - Das, Marcel
AU - Gong, Xiaodong
PY - 2002/3
Y1 - 2002/3
N2 - We show how non-parametric flexibility can be attained in a structural labour supply model that can be used to analyse all sorts of (non-linear) tax and benefits reforms. The direct utility function is approximated with a series expansion. For given length of the expansion, the model is estimated by smooth simulated maximum likelihood, using Dutch data on labour supply of married females. Estimates of own and cross wage elasticities and tax reform effects suggest that a series expansion of order two is enough. Monte Carlo simulations show that the estimator performs very well, unless there is measurement error in the hours variable.
AB - We show how non-parametric flexibility can be attained in a structural labour supply model that can be used to analyse all sorts of (non-linear) tax and benefits reforms. The direct utility function is approximated with a series expansion. For given length of the expansion, the model is estimated by smooth simulated maximum likelihood, using Dutch data on labour supply of married females. Estimates of own and cross wage elasticities and tax reform effects suggest that a series expansion of order two is enough. Monte Carlo simulations show that the estimator performs very well, unless there is measurement error in the hours variable.
KW - Labour supply
KW - Tax reforms
KW - Non-parametric estimation
UR - http://www.scopus.com/inward/record.url?scp=0346724435&partnerID=8YFLogxK
U2 - 10.1016/S0304-4076(01)00128-2
DO - 10.1016/S0304-4076(01)00128-2
M3 - Article
VL - 107
SP - 345
EP - 374
JO - Journal of Econometrics
JF - Journal of Econometrics
SN - 0304-4076
IS - 1-2
ER -