Nonparametric Structural Estimation of Labor Supply in the Presence of Censoring

Che-Yuan Liang ()

No 2009:6, Working Paper Series, Center for Fiscal Studies from Uppsala University, Department of Economics

Abstract: This paper extends the nonparametric method to estimate labor supply developed by Blomquist and Newey (2002) to handle cases in which there are individuals who do not work. The method is then applied to married women in Sweden from 1973 to 1999. For 1999, I find an aggregate uncompensated wage elasticity around 1 and an aggregate income elasticity around -0.05. Furthermore, marginal tax rates are beyond the net government revenue maximizing rates. Despite large labor supply effects, the dramatic evolution of the tax system can only explain a small share of the 58 percent rise in female labor supply during this period.

Keywords: female labor supply; nonparametric estimation; nonlinear budget sets; tax revenues (search for similar items in EconPapers)
JEL-codes: C14 D31 H31 J22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: 2009-05-18
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Working Paper: Nonparametric Structural Estimation of Labor Supply in the Presence of Censoring (2009)
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