Theoretical and practical arguments for modeling labor supply as a choice among latent jobs

John Dagsvik, Zhiyang Jia, Tom Kornstad and Thor Thoresen

Discussion Papers from Statistics Norway, Research Department

Abstract: Models of labor supply derived from stochastic utility representations and discretized sets of feasible hours of work have gained popularity because they are more practical than standard approaches based on marginal calculus. In this paper we argue that practicality is not the only feature that can be addressed by means of stochastic choice theory. This theory also offers a powerful framework for developing a more realistic model for labor supply choices, founded on individuals having preferences over jobs and facing restrictions on the choice of jobs and hours of work. We discuss and clarify how this modeling framework deviates from both the conventional discrete approach (van Soest, 1995), as well as the standard textbook approach based on marginal calculus (Hausman, 1985). We furthermore discuss how the model based on job choice offers the possibility of conducting a richer set of simulations of alternative policies.

Keywords: Labor supply; Random utility models; Tax reforms (search for similar items in EconPapers)
JEL-codes: C51 H24 J22 (search for similar items in EconPapers)
Date: 2012-06
New Economics Papers: this item is included in nep-lab and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.ssb.no/a/publikasjoner/pdf/DP/dp692.pdf (application/pdf)

Related works:
Journal Article: THEORETICAL AND PRACTICAL ARGUMENTS FOR MODELING LABOR SUPPLY AS A CHOICE AMONG LATENT JOBS (2014)
Working Paper: Theoretical and Practical Arguments for Modeling Labor Supply as a Choice among Latent Jobs (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ssb:dispap:692

Access Statistics for this paper

More papers in Discussion Papers from Statistics Norway, Research Department P.O.Box 8131 Dep, N-0033 Oslo, Norway. Contact information at EDIRC.
Bibliographic data for series maintained by L Maasø ().