Lessons from Specification Tests for a Labour Supply Model
Journal
Annales d'Économie et de Statistique
ISSN
0769-489X
Type
journal article
Date Issued
1991
Author(s)
Abstract
Not available in German. This paper investigates the properties of Box-Cox specifications for the labor supply of married women in France, estimated in four stages involving two dichotomous models, a regression with selectivity correction, and the calculation of sample means. Previous estimates implied wage elasticities high enough to be seriously questioned. We re-estimate the model with a more flexible stochastic specification and allow for some variation in the preference parameters across individuals. Furthermore, we account for a certain kind of heteroscedasticity. We submit all steps of the estimation to the specification tests using among others LM tests against heteroscedasticity and misspecification of the distribution, information matrix tests, Andrews' x²-tests, Vuong's LR-test for non-tested alternatives. Although we do find somewhat lower elasticities the detected heteroscedasticity or parameter stability problems apear to be seious enough to caution against the use of these models for policy simulation.
Language
English
HSG Classification
contribution to scientific community
Refereed
No
Publisher
Association pour le Développement de la Recherche en Economie et en Statistique
Publisher place
Amiens
Volume
20/21
Start page
193
End page
217
Pages
25
Subject(s)
Eprints ID
15550