Full- and Part-Time Wage Differentials and Female Labor Supply: Discontinuous Budget Constraint and Endogenous Wages

Myeong-Su Yun ()

Departmental Working Papers from Rutgers University, Department of Economics

Abstract: We introduce a structural model which jointly estimates the full-time wage premium and female labor supply, using the piecewise-linear budget constraint method. Our model incorporates a discontinuous budget line at cut-off hours (35 hours a week), caused by the coexistence of both full- and part-time wage rates, and makes wages fully endogenous to the labor supply choice. We estimate a structural model using the female sample from March 1995 current population survey. The estimate of the full-time premium from our structural model is slightly larger than that of OLS, while Heckman's two-step method predicts a small full-time wage premium. Our estimates for labor supply elasticities lie within the ranges reported in previous research.

Keywords: discontinuous budget line; endogenous wages; female labor supply; full-time wage premium; piecewise-linear budget constraint method (search for similar items in EconPapers)
JEL-codes: C34 J22 J31 (search for similar items in EconPapers)
Date: 2000-07-11
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Persistent link: https://EconPapers.repec.org/RePEc:rut:rutres:199835

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