A Simultaneous Wage and Labor Supply Model with Hours Restrictions

Martijn P. Tummers and Isolde Woittiez

Journal of Human Resources, 1991, vol. 26, issue 3, 393-423

Abstract: Two common assumptions in neoclassical labor supply models are relaxed by introducing hours restrictions and endogenous wages into a labor supply model. First, we incorporate the possibility that an individual is faced with a limited availability of jobs with different, distinct, numbers of hours. Moreover, the wage rate is allowed to depend on the number of working hours. The latter implies a nonlinear budget constraint. The model is estimated for data from a Dutch labor mobility survey. The results for females suggest not only the existence of hours restrictions, but also of a nonlinear budget constraint. Including both features generates a simulated hours distribution much more in line with the actual data than does a standard Tobit model.

Date: 1991
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Persistent link: https://EconPapers.repec.org/RePEc:uwp:jhriss:v:26:y:1991:i:3:p:393-423

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