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Distribution-Free Structural Estimation with Nonlinear Budget Sets

Che-Yuan Liang

No 2014:4, Working Paper Series, Center for Fiscal Studies from Uppsala University, Department of Economics

Abstract: I develop a structural method for evaluating labor supply in nonlinear budget sets that does not require any distributional assumptions. The model only requires that preferences are convex on the budget frontier. It can be extended to account for features such as fixed costs of work and the stigma cost of welfare participation. It can also be adapted for estimation of earnings, hours of work, and functions that depend on the labor supply distribution, including tax revenue and cumulative distribution functions. The method is applied to estimate the effects of taxes on various labor supply outcomes in the U.S. and Sweden.

Keywords: nonlinear budget sets; structural models; distribution-free estimation; labor supply (search for similar items in EconPapers)
JEL-codes: D04 H24 J22 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2014-04-14
New Economics Papers: this item is included in nep-ecm and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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