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Labor supply under participation and hours constraints

  • The paper extends a static discrete-choice labor supply model by adding participation and hours constraints. We identify restrictions by survey information on the eligibility and search activities of individuals as well as actual and desired hours. This provides for a more robust identification of preferences and constraints. Both, preferences and restrictions are allowed to vary by and are related through observed and unobserved characteristics. We distinguish various restrictions mechanisms: labor demand rationing, working hours norms varying across occupations, and insufficient public childcare on the supply side of the market. The effect of these mechanisms is simulated by relaxing different constraints at a time. We apply the empirical frame- work to evaluate an in-work benefit for low-paid parents in the German institutional context. The benefit is supposed to increase work incentives for secondary earners. Based on the structural model we are able to disentangle behavioral reactions into the pure incentive effect and theThe paper extends a static discrete-choice labor supply model by adding participation and hours constraints. We identify restrictions by survey information on the eligibility and search activities of individuals as well as actual and desired hours. This provides for a more robust identification of preferences and constraints. Both, preferences and restrictions are allowed to vary by and are related through observed and unobserved characteristics. We distinguish various restrictions mechanisms: labor demand rationing, working hours norms varying across occupations, and insufficient public childcare on the supply side of the market. The effect of these mechanisms is simulated by relaxing different constraints at a time. We apply the empirical frame- work to evaluate an in-work benefit for low-paid parents in the German institutional context. The benefit is supposed to increase work incentives for secondary earners. Based on the structural model we are able to disentangle behavioral reactions into the pure incentive effect and the limiting impact of constraints at the intensive and extensive margin. We find that the in-work benefit for parents substantially increases working hours of mothers of young children, especially when they have a low education. Simulating the effects of restrictions shows their substantial impact on employment of mothers with young children.show moreshow less

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Metadaten
Author:Kai-Uwe Müller, Michael NeumannGND, Katharina WrohlichORCiDGND
URN:urn:nbn:de:kobv:517-opus4-427656
DOI:https://doi.org/10.25932/publishup-42765
ISSN:2628-653X
Parent Title (English):CEPA Discussion Papers
Subtitle (English):An extended structural model for policy evaluations
Series (Serial Number):CEPA Discussion Papers (3)
Document Type:Working Paper
Language:English
Date of first Publication:2019/05/03
Year of Completion:2019
Publishing Institution:Universität Potsdam
Release Date:2019/05/03
Tag:gender; hours restrictions; involuntary unemployment; labor supply
Issue:3
Pagenumber:50
RVK - Regensburg Classification:QV 350, QV 202, QV 221, MS 3050
Organizational units:Zentrale und wissenschaftliche Einrichtungen / Center for Economic Policy Analysis (CEPA)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
JEL Classification:J Labor and Demographic Economics / J1 Demographic Economics / J16 Economics of Gender; Non-labor Discrimination
J Labor and Demographic Economics / J2 Demand and Supply of Labor / J22 Time Allocation and Labor Supply
J Labor and Demographic Economics / J2 Demand and Supply of Labor / J23 Labor Demand
J Labor and Demographic Economics / J6 Mobility, Unemployment, and Vacancies / J64 Unemployment: Models, Duration, Incidence, and Job Search
Peer Review:Nicht referiert
Licence (German):License LogoKeine Nutzungslizenz vergeben - es gilt das deutsche Urheberrecht