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Labor Supply as a Choice among Latent Jobs: Unobserved Heterogeneity and Identification

Author

Listed:
  • Dagsvik, John K.

    (Research Department, Statistics Norway, and the Frisch Centre of Economic Research)

  • Jia, Zhiyang

    (Statistics Norway)

Abstract
This paper discusses aspects of a framework for modeling labor supply where the notion of job choice is fundamental. In this framework, workers are assumed to have preferences over latent job opportunities belonging to worker-specific choice sets from which they choose their preferred job. The observed hours of work and wage is interpreted as the job-specific hours and wage of the chosen job. The main contribution of this paper is an analysis of the identification problem of this framework under various conditions, when conventional cross-section micro-data are applied. The modeling framework is applied to analyze labor supply behavior for married/cohabiting couples using Norwegian micro data. Specifically, we estimate two model versions with in the general framework. Based on the empirical results, we discuss further qualitative properties of the model versions. Finally, we apply the preferred model version to conduct a simulation experiment of a counterfactual policy reforms.

Suggested Citation

  • Dagsvik, John K. & Jia, Zhiyang, 2014. "Labor Supply as a Choice among Latent Jobs: Unobserved Heterogeneity and Identification," Memorandum 22/2014, Oslo University, Department of Economics.
    • Handle: RePEc:hhs:osloec:2014_022
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Ray Rees & Thor O. Thoresen & Trine E. Vattø, 2023. "Alternatives to Paying Child Benefit to the Rich: Means‐Testing or Higher Tax?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 56(3), pages 328-354, September.
    2. Decoster, André & Capéau, Bart, 2016. "Getting tired of work, or re-tiring in absence of decent job opportunities? Some insights from an estimated Random Utility/Random Opportunity model on Belgian data," EUROMOD Working Papers EM4/16, EUROMOD at the Institute for Social and Economic Research.
    3. Vidar Christiansen & Zhiyang Jia & Thor O. Thoresen, 2022. "Assessing income tax perturbations," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(2), pages 472-504, April.
    4. Dagsvik, John K, 2017. "Invariance Axioms and Functional Form Restrictions in Structural Models," Memorandum 08/2017, Oslo University, Department of Economics.
    5. John K. Dagsvik & Steinar Strom, 2022. "Aggregate marginal costs of public funds," Public Sector Economics, Institute of Public Finance, vol. 46(2), pages 239-260.
    6. Slavko Bezeredi & Marko Ledić & Ivica Rubil & Ivica Urban, 2019. "Making work pay in Croatia: An ex-ante evaluation of two in-work benefits using miCROmod," International Journal of Microsimulation, International Microsimulation Association, vol. 12(3), pages 28-61.
    7. Thoresen, Thor O. & Vattø, Trine E., 2019. "An up-to-date joint labor supply and child care choice model," European Economic Review, Elsevier, vol. 112(C), pages 51-73.
    8. Dagsvik, John K. & Strøm, Steinar & Locatelli, Marilena, 2021. "Marginal compensated effects in discrete labor supply models," Journal of choice modelling, Elsevier, vol. 41(C).
    9. Bart Capéau & André Decoster & Stijn Van Houtven, 2024. "Piecemeal Modeling of the Effects of Joint Direct and Indirect Tax Reforms," Public Finance Review, , vol. 52(1), pages 111-149, January.
    10. Zhiyang Jia & Thor O. Thoresen & Trine E. Vattø & Thor Olav Thoresen, 2024. "Explaining the Declining Labor Supply Responsiveness of Married Women," CESifo Working Paper Series 11176, CESifo.
    11. Jia, Zhiyang & Vattø, Trine Engh, 2021. "Predicting the path of labor supply responses when state dependence matters," Labour Economics, Elsevier, vol. 71(C).
    12. Dagsvik, John K., 2018. "Invariance axioms and functional form restrictions in structural models," Mathematical Social Sciences, Elsevier, vol. 91(C), pages 85-95.
    13. John K. Dagsvik & Steinar Strøm, 2017. "Labor supply analysis with non-convex budget sets without the Hausman approach," Discussion Papers 857, Statistics Norway, Research Department.
    14. Zhiyang Jia & Trine E. Vattø, 2016. "The path of labor supply adjustment. Sources of lagged responses to tax-benefit reforms," Discussion Papers 854, Statistics Norway, Research Department.

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    More about this item

    Keywords

    Labor supply; non-pecuniary job attributes; latent choice sets; random utility models; identification;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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