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Lessons from Specification Tests for a Labour Supply Model

François Laisney, Michael Lechner & Steinar Strom

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abstract Not available in German. This paper investigates the properties of Box-Cox specifications for the labor supply of married women in France, estimated in four stages involving two dichotomous models, a regression with selectivity correction, and the calculation of sample means. Previous estimates implied wage elasticities high enough to be seriously questioned. We re-estimate the model with a more flexible stochastic specification and allow for some variation in the preference parameters across individuals. Furthermore, we account for a certain kind of heteroscedasticity. We submit all steps of the estimation to the specification tests using among others LM tests against heteroscedasticity and misspecification of the distribution, information matrix tests, Andrews' x²-tests, Vuong's LR-test for non-tested alternatives. Although we do find somewhat lower elasticities the detected heteroscedasticity or parameter stability problems apear to be seious enough to caution against the use of these models for policy simulation.
   
type journal paper
   
keywords
   
language English
kind of paper journal article
date of appearance 1991
journal Annales d'Économie et de Statistique
publisher Association pour le Développement de la Recherche en Economie et en Statistique (Amiens)
ISSN 0769-489X
volume of journal 20/21
page(s) 193-217
review not reviewed
   
citation Laisney, F., Lechner, M., & Strom, S. (1991). Lessons from Specification Tests for a Labour Supply Model. Annales d'Économie et de Statistique, 20/21, 193-217.