A structural labour supply model with flexible preferences

Arthur van Soest, Marcel Das, Xiaodong Gong

Research output: Contribution to journalArticle

50 Citations (Scopus)

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 languageEnglish
Pages (from-to)345-374
Number of pages30
JournalJournal of Econometrics
Volume107
Issue number1-2
DOIs
Publication statusPublished - Mar 2002
Externally publishedYes

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