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Author: Cogan, John F.
Resulting in 2 citations.
1. Cogan, John F.
Fixed Costs and Labor Supply
Econometrica 49,4 (July 1981): 945-963.
Also: http://www.jstor.org/stable/1912512
Cohort(s): Mature Women
Publisher: Department of Economics, Northwestern University
Keyword(s): Age and Ageing; Behavior; Children; Earnings; Family Influences; Schooling; Wages, Reservation

Permission to reprint the abstract has not been received from the publisher.

This paper presents a theoretical and empirical model of labor supply when there are fixed costs associated with entry into the labor market. An implication of the existence of fixed costs is that individuals will not be willing to work below some minimum number of hours, termed reservation hours. A maximum likelihood estimator that allows reservation hours to be non-zero and differ randomly among individuals is developed. The estimator is applied to data on married women to estimate their labor supply functions. The results indicate that fixed costs of work are of prime importance in determining the labor supply behavior of married women. The results also suggest that large own-wage elasticities found in earlier studies of married women's labor supply are, in part, due to ignoring the existence of fixed costs of labor market entry.
Bibliography Citation
Cogan, John F. "Fixed Costs and Labor Supply." Econometrica 49,4 (July 1981): 945-963.
2. Cogan, John F.
Married Women's Labor Supply: A Comparison of Alternative Estimation Procedures
In: Female Labor Supply: Theory and Estimation. JP Smith, ed., Princeton, NJ: Princeton University Press, 1980: 90-118
Cohort(s): Mature Women
Publisher: Princeton University Press
Keyword(s): Career Patterns; Dual-Career Families; Educational Returns; Labor Supply; Research Methodology

Permission to reprint the abstract has not been received from the publisher.

Four methods of estimating the parameters underlying married women's labor supply function are examined in order to deal with the problem that no market wage is observed for women who do not work. The implicit restrictive assumptions concerning the disturbance structure of two conventional empirical approaches are brought to light. Gronau's approach of estimating reservation wages is compared with conventional methods and judged to be inferior on methodological grounds. Empirical comparisons are made among the two conventional methods and Heckman's 1974 maximum likelihood method. Large and systematic differences in the estimated parameters of the hours of work equation are found between Heckman's approach and the conventional procedure of using only the subsample of working women. Systematic, but relatively small differences in estimated hours of work parameters are found between Heckman's method and an alternative conventional approach of imputing wages to all women and estimating the hours of work equation over the entire sample of observation. Comparisons of predictions among the various are discussed as well as the differences in estimated wage effects. If the estimates are used to predict reservation wages (for use as an estimate of the value of time) or labor force participation rates, the small differences between the two approaches suggest that the simpler and cheaper conventional approach may be preferred.
Bibliography Citation
Cogan, John F. "Married Women's Labor Supply: A Comparison of Alternative Estimation Procedures" In: Female Labor Supply: Theory and Estimation. JP Smith, ed., Princeton, NJ: Princeton University Press, 1980: 90-118