A structural labour supply model with flexible preferences

Arthur van Soest, Marcel Das, Xiaodong Gong

Research output: Contribution to journalArticle

48 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

Fingerprint

Labor Supply
Tax
Series Expansion
Simulated Maximum Likelihood
Wages
Utility Function
Measurement Error
Sort
Elasticity
Monte Carlo Simulation
Flexibility
Estimator
Model
Estimate
Labor supply

Cite this

van Soest, Arthur ; Das, Marcel ; Gong, Xiaodong. / A structural labour supply model with flexible preferences. In: Journal of Econometrics. 2002 ; Vol. 107, No. 1-2. pp. 345-374.
@article{d0472188e02940a69ea15298a35f1e05,
title = "A structural labour supply model with flexible preferences",
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.",
keywords = "Labour supply, Tax reforms, Non-parametric estimation",
author = "{van Soest}, Arthur and Marcel Das and Xiaodong Gong",
year = "2002",
month = "3",
doi = "10.1016/S0304-4076(01)00128-2",
language = "English",
volume = "107",
pages = "345--374",
journal = "Journal of Econometrics",
issn = "0304-4076",
publisher = "Elsevier BV",
number = "1-2",

}

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 journalArticle

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 -