Inverted U-shaped relationship between non-labor income and labor hours, with wage rates as the threshold variable

Qi Wang
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Qi Wang: School of Public Administration, Shandong Technology and Business University, Yantai, China

Review of Economic Assessment, 2024, vol. 3, issue 1, 20-34

Abstract: Non-labor income is a crucial factor influencing time allocation, and prior studies have primarily concentrated on the linear association between non-labor income and labor hours. Utilizing micro-survey data from the CFPS in 2018 and 2020 and employing the panel threshold model, this paper empirically identifies a double threshold with the wage rate as the threshold variable. This finding reveals a non-linear relationship between non-labor income and labor hours. The two thresholds categorize the relationship into three intervals. In the first interval, non-labor income significantly promotes labor hours, while in the second and third intervals, non-labor income significantly decreases labor hours, exhibiting slightly varying degrees of influence. In general, the relationship between non-labor income and labor hours demonstrates an irregular inverted U-shaped pattern. Upon dividing the workers in the sample into three groups based on the two thresholds, it is observed that wage rates exhibit a positive correlation with non-labor income.

Keywords: Non-labor income; Threshold model; Inverted U-shaped (search for similar items in EconPapers)
Date: 2024
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