What Time Use Surveys Can (And Cannot) Tell Us about Labor Supply

Ruoyao Shi () and Cheng Chou ()
Additional contact information
Cheng Chou: University of Leicester

No 201912, Working Papers from University of California at Riverside, Department of Economics

Abstract: It has been widely acknowledged that the measurement of labor supply in the Current Population Survey (CPS) and other conventional microeconomic surveys has nonclassical measurement error, which will bias the estimates of crucial parameters in labor economics, such as labor supply elasticity. Time diary studies, such as the American Time Use Survey (ATUS), only have accurate measurement of hours worked on a single day, hence the weekly hours worked are unobserved. Despite the missing data problem, we provide several consistent estimators of the parameters in weekly labor supply equation using the information in the time use surveys. The consistency of our estimators does not require more conditions beyond those for a usual two stage least square (2SLS) estimator when the true weekly hours worked are observed. We also show that it is impossible to recover the weekly number of hours worked or its distribution function from time use surveys like the ATUS. In our empirical application we find considerable evidence of nonclassical measurement error in the hours worked in the CPS, and illustrate the consequences of using mismeasured weekly hours worked in empirical studies.

Keywords: measurement error; missing data; instrumental variable; asymptotic efficiency; labor supply (search for similar items in EconPapers)
JEL-codes: C13 C21 C26 C81 J22 (search for similar items in EconPapers)
Pages: 42 Pages
Date: 2019-01
New Economics Papers: this item is included in nep-ecm and nep-ore
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Citations: View citations in EconPapers (2)

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https://economics.ucr.edu/repec/ucr/wpaper/201912.pdf First version, 2019 (application/pdf)

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Working Paper: What Time Use Surveys Can (And Cannot) Tell Us About Labor Supply (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ucr:wpaper:201912

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