Search Results

Source: Econometrica
Resulting in 18 citations.
1. Abowd, John M.
Card, David E.
On the Covariance Structure of Earnings and Hours Changes
Econometrica 57,2 (March 1989): 411-445.
Also: http://www.jstor.org/stable/1912561
Cohort(s): Older Men
Publisher: Department of Economics, Northwestern University
Keyword(s): Earnings; Labor Supply; Life Cycle Research; Modeling; Work Hours

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

This paper presents an empirical analysis of individual earnings and hours data from three different longitudinal surveys. In the first part of the paper we catalog the main features of the covariance structure of earnings and hours changes. We find that this structure is very similar across data sets, and may be adequately summarized by a simple components-of-variance model, consisting of (i) serially uncorrelated measurement error, (ii) a shared component of earnings and hours with a second-order moving average covariance structure, and (iii) a nonstationary component that affects only the variances and contemporaneous covariances of earnings and hours. In the second part of the paper we offer an interpretation of this model in terms of a simple life-cycle labor supply model. On the assumption that we can identify individual productivity growth with the shared component of earnings and hours variation, we obtain estimates of the intertemporal substitution elasticity. The results are not favorable to the life-cycle model: most of the covariation of earnings and hours occurs at fixed hourly wage rates.
Bibliography Citation
Abowd, John M. and David E. Card. "On the Covariance Structure of Earnings and Hours Changes." Econometrica 57,2 (March 1989): 411-445.
2. Belzil, Christian
Hansen, Jörgen
Unobserved Ability and the Return to Schooling
Econometrica 70,5 (2002): 2078-2091.
Also: http://www.jstor.org/stable/3082032
Cohort(s): NLSY79
Publisher: Blackwell Publishing, Inc. => Wiley Online
Keyword(s): Educational Attainment; Educational Returns; Modeling; Schooling

We estimate a structural dynamic programming model of schooling decisions with unobserved heterogeneity in school ability and market ability on a sample taken from the National Longitudinal Survey of Youth (NLSY). Both the instantaneous utility of attending school and the wage regression function are estimated flexibly. The null hypothesis that the local returns to schooling are constant is strongly rejected in favor of a convex wage regression function composed of 8 spline segments. The local returns are very low until grade 11 (1% per year or less), increase to 3.7% in grade 12 and exceed 10% only from grade 14 to grade 16. The average return increases smoothly from 0.4% (grade 7) to 4.6% (grade 16). The convexity of the log wage regression function implies that those who obtain more schooling also experience higher average returns. We strongly reject the null hypothesis that unobserved market ability is uncorrelated with realized schooling attainments, which underlies many previous studies that have used OLS to estimate the return to schooling. The correlation between realized schooling and market ability is found to be positive and is consistent with the existence of a positive 'Ability Bias'.
Bibliography Citation
Belzil, Christian and Jörgen Hansen. "Unobserved Ability and the Return to Schooling." Econometrica 70,5 (2002): 2078-2091.
3. Berkovec, James
Stern, Steven
Job Exit Behavior of Older Men
Econometrica 59,1 (January 1991): 189-210.
Also: http://www.jstor.org/stable/2938246
Cohort(s): Older Men
Publisher: Department of Economics, Northwestern University
Keyword(s): Age and Ageing; Education; Employment; Employment, History; Health Factors; Health/Health Status/SF-12 Scale; Heterogeneity; Labor Economics; Modeling; Quits; Retirement; Unemployment

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

A dynamic programming model of job exit behavior and retirement is constructed and estimated using the method of simulated moments.The model and estimation method allow for both unobserved individual effects and unobserved job-specific "match" effects. The model is estimated using two different assumptions about individual discount factors. First, a static model, with the discount factor equal to zero, is estimated. Then a dynamic model, with the discount factor equal to .95 is estimated. In both models, it is found that bad health, age, and lack of education increase the probability of retirement. The dynamic model performs better than the static model and has different implications for retirement behavior. The job-specific effects are an important source of unobserved heterogeneity.
Bibliography Citation
Berkovec, James and Steven Stern. "Job Exit Behavior of Older Men." Econometrica 59,1 (January 1991): 189-210.
4. Butler, J. S.
Moffitt, Robert A.
A Computationally Efficient Quadrature Procedure for the One-Factor Multinomial Probit Model
Econometrica 50,3 (May 1982): 761-764.
Also: http://www.jstor.org/stable/1913405
Cohort(s): Young Women
Publisher: Department of Economics, Northwestern University
Keyword(s): Modeling, Probit; Research Methodology

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

In this note, the authors point out that the use of Gaussian quadrature is extremely efficient and is well within the bounds of computational feasibility on modern computers. They state the nature of the integrals that need to be evaluated, provide a brief exposition of Gaussian quadrature, and provide a numerical illustration of its use in estimating a one-factor multinomial probit model.
Bibliography Citation
Butler, J. S. and Robert A. Moffitt. "A Computationally Efficient Quadrature Procedure for the One-Factor Multinomial Probit Model." Econometrica 50,3 (May 1982): 761-764.
5. Carneiro, Pedro
Heckman, James J.
Vytlacil, Edward
Evaluating Marginal Policy Changes and the Average Effect of Treatment for Individuals at the Margin
Econometrica 78,1 (January 2010): 377–394.
Also: http://www.ucl.ac.uk/~uctppca/chv_econometrica.pdf
Cohort(s): NLSY79
Publisher: Blackwell Publishing, Inc. => Wiley Online
Keyword(s): Average Marginal Treatment Effect; Effects of Marginal Policy Changes; Marginal Policy Relevant Treatment Effect; Marginal Treatment Effect

This paper develops methods for evaluating marginal policy changes. We characterize how the effects of marginal policy changes depend on the direction of the policy change, and show that marginal policy effects are fundamentally easier to identify and to estimate than conventional treatment parameters. We develop the connection between marginal policy effects and the average effect of treatment for persons on the margin of indifference between participation in treatment and nonparticipation, and use this connection to analyze both parameters. We apply our analysis to estimate the effect of marginal changes in tuition on the return to going to college.
Bibliography Citation
Carneiro, Pedro, James J. Heckman and Edward Vytlacil. "Evaluating Marginal Policy Changes and the Average Effect of Treatment for Individuals at the Margin." Econometrica 78,1 (January 2010): 377–394. A.
6. 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.
7. Cunha, Flavio
Heckman, James J.
Schennach, Susanne
Estimating the Technology of Cognitive and Noncognitive Skill Formation
Econometrica 78,3 (1 May 2010): 883–931.
Also: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2885826/
Cohort(s): Children of the NLSY79, NLSY79
Publisher: Blackwell Publishing, Inc. => Wiley Online
Keyword(s): Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); Behavior Problems Index (BPI); Home Observation for Measurement of Environment (HOME); Life Cycle Research; Motor and Social Development (MSD); Parental Influences; Peabody Individual Achievement Test (PIAT- Math); Peabody Individual Achievement Test (PIAT- Reading); Peabody Picture Vocabulary Test (PPVT); Rosenberg Self-Esteem Scale (RSES) (see Self-Esteem); Rotter Scale (see Locus of Control); Skill Depreciation; Skill Formation; Temperament

This paper formulates and estimates multistage production functions for child cognitive and noncognitive skills. Output is determined by parental environments and investments at different stages of childhood. We estimate the elasticity of substitution between investments in one period and stocks of skills in that period to assess the benefits of early investment in children compared to later remediation. We establish nonparametric identification of a general class of nonlinear factor models. A by-product of our approach is a framework for evaluating childhood interventions that does not rely on arbitrarily scaled test scores as outputs and recognizes the differential effects of skills in different tasks. Using the estimated technology, we determine optimal targeting of interventions to children with different parental and personal birth endowments. Substitutability decreases in later stages of the life cycle for the production of cognitive skills. It increases in later stages of the life cycle for the production of noncognitive skills. This finding has important implications for the design of policies that target the disadvantaged. For some configurations of disadvantage and outcomes, it is optimal to invest relatively more in the later stages of childhood.
Bibliography Citation
Cunha, Flavio, James J. Heckman and Susanne Schennach. "Estimating the Technology of Cognitive and Noncognitive Skill Formation." Econometrica 78,3 (1 May 2010): 883–931. A.
8. Eckstein, Zvi
Wolpin, Kenneth I.
Estimating a Market Equilibrium Search Model from Panel Data on Individuals
Econometrica 58,4 (July 1990): 783-808.
Also: http://www.jstor.org/stable/2938350
Cohort(s): NLSY79
Publisher: Department of Economics, Northwestern University
Keyword(s): Heterogeneity; Job Search; Labor Force Participation; Minimum Wage; Modeling, Mixed Effects; Unemployment; Wages; Welfare

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

This paper demonstrates the feasibility of estimating a Nash labor market equilibrium model using only information of workers. The equilibrium model is adapted from Albrecht and Axell (1984) and is based on workers who are homogeneous in terms of market productivity and heterogeneous in terms of non-market productivity, and on firms which are heterogeneous in terms of productive efficiency. The equilibrium model is contrasted in terms of its fit to the data with an unrestricted version of the model which is based on a mixture of negative binomial distributions. The equilibrium model fails to conform to the data in exactly the dimension of its major focus, namely it implies that measurement error accounts for almost all of the dispersion in observed wages. The equilibrium model also does not do well in fitting the unemployment duration distribution compared to the unrestricted model. The problem is that the duration distribution itself does not support the existence of significant heterogeneity, as evidenced by the estimates of the unrestricted model. The paper also illustrates the use of such models for policy analysis by simulating the welfare effects of a minimum wage.
Bibliography Citation
Eckstein, Zvi and Kenneth I. Wolpin. "Estimating a Market Equilibrium Search Model from Panel Data on Individuals." Econometrica 58,4 (July 1990): 783-808.
9. Geweke, John
Marshall, Robert C.
Zarkin, Gary A.
Mobility Indices in Continuous Time Markov Chains
Econometrica 54,6 (November 1986): 1407-1423.
Also: http://www.jstor.org/stable/1914306
Cohort(s): Young Men
Publisher: Department of Economics, Northwestern University
Keyword(s): Markov chain / Markov model; Mobility; Research Methodology; Statistical Analysis

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

The axiomatic derivation of mobility indices for first-order Markov chain models in discrete time is extended to continuous-time models. Many of the logical inconsistencies among axioms noted in the literature for the discrete time models do not arise for continuous time models. It is shown how mobility indices in continuous time Markov chains may be estimated from observations at two points in time. Specific attention is given to the case in which the states are fractiles, and an empirical example is given.
Bibliography Citation
Geweke, John, Robert C. Marshall and Gary A. Zarkin. "Mobility Indices in Continuous Time Markov Chains." Econometrica 54,6 (November 1986): 1407-1423.
10. Griliches, Zvi
Estimating the Returns to Schooling: Some Econometric Problems
Econometrica 45,1 (January 1977): 1-22.
Also: http://www.jstor.org/stable/1913285
Cohort(s): Young Men
Publisher: Department of Economics, Northwestern University
Keyword(s): Earnings; Educational Attainment; Schooling

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

This study surveys various econometric issues that arise in estimating a relationship between the logarithm of earnings, schooling, and other variables and focuses on the problem of "ability" as an omitted variable. The paper shows that in optimizing models the "ability bias" need not be positive. Using recent analyses from the NLS of Young Men, when schooling is treated symmetrically, is allowed to be subject to errors of measurement, and is correlated with the disturbance term, the usual conclusion of a significantly positive "ability bias" in the estimated schooling coefficients is not supported and possibly even reversed.
Bibliography Citation
Griliches, Zvi. "Estimating the Returns to Schooling: Some Econometric Problems." Econometrica 45,1 (January 1977): 1-22.
11. Heckman, James J.
Shadow Prices, Market Wages, and Labor Supply
Econometrica 42,4 (July 1974): 679-694.
Also: http://www.jstor.org/stable/1913937
Cohort(s): Mature Women
Publisher: Department of Economics, Northwestern University
Keyword(s): Children; Husbands, Income; Schooling; Wages; Wages, Reservation; Wives; Work History

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

This paper develops a model which generates the probability that a woman works, her hours of work, her asking wage, and her offered wage from a common set of parameters. These parameters allow for estimation of the value of time for non-working women, and the wage rates they would face in the market. A method of estimating these parameters is proposed and applied.
Bibliography Citation
Heckman, James J. "Shadow Prices, Market Wages, and Labor Supply." Econometrica 42,4 (July 1974): 679-694.
12. Holtz-Eakin, Douglas
Newey, Whitney K.
Rosen, Harvey S.
Estimating Vector Autoregressions with Panel Data
Econometrica 56,6 (November 1988): 1371-1395.
Also: http://www.jstor.org/stable/1913103
Cohort(s): Older Men
Publisher: Department of Economics, Northwestern University
Keyword(s): Labor Supply; Modeling; Panel Study of Income Dynamics (PSID); Research Methodology; Variables, Instrumental; Wages

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

This paper considers estimation and testing of vector autoregression coefficients in panel data, and applies the techniques to analyze the dynamic relationships between wages and hours worked in two samples of American males, the PSID and NLS of Older Men. The model allows for nonstationary individual effects, and is estimated by applying instrumental variables to the quasi-differenced autoregressive equations. Particular attention is paid to specifying lag lengths, forming convenient test statistics, and testing for the presence of measurement error. The empirical results suggest the absence of lagged hours in the wage forecasting equation. Our results also show that lagged hours is important in the hours equation, which is consistent with alternatives to the simple labor supply model that allow for costly hours adjustment or preferences that are not time separable.
Bibliography Citation
Holtz-Eakin, Douglas, Whitney K. Newey and Harvey S. Rosen. "Estimating Vector Autoregressions with Panel Data." Econometrica 56,6 (November 1988): 1371-1395.
13. Kennan, John
Walker, James R.
The Effect of Expected Income on Individual Migration Decisions
Econometrica 79,1 (January 2011): 211-251.
Also: http://onlinelibrary.wiley.com/doi/10.3982/ECTA4657/abstract
Cohort(s): NLSY79
Publisher: Blackwell Publishing, Inc. => Wiley Online
Keyword(s): Economics, Demographic; High School Completion/Graduates; Income; Income Dynamics/Shocks; Income Level; Migration

This paper develops a tractable econometric model of optimal migration, focusing on expected income as the main economic influence on migration. The model improves on previous work in two respects: it covers optimal sequences of location decisions (rather than a single once-for-all choice) and it allows for many alternative location choices. The model is estimated using panel data from the National Longitudinal Survey of Youth on white males with a high-school education. Our main conclusion is that interstate migration decisions are influenced to a substantial extent by income prospects. The results suggest that the link between income and migration decisions is driven both by geographic differences in mean wages and by a tendency to move in search of a better locational match when the income realization in the current location is unfavorable.
Bibliography Citation
Kennan, John and James R. Walker. "The Effect of Expected Income on Individual Migration Decisions." Econometrica 79,1 (January 2011): 211-251.
14. Kniesner, Thomas J.
An Indirect Test of Complementarity in a Family Labor Supply Model
Econometrica 44,4 (July 1976): 651-669.
Also: http://www.jstor.org/stable/1913434
Cohort(s): Mature Women, Older Men
Publisher: Department of Economics, Northwestern University
Keyword(s): Age and Ageing; Family Resources; Housework/Housewives; Husbands, Income; Schooling; Wives, Income

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

The author derives an indirect test of net complementarity in a family labor supply model. The results show that the sign of the husband's gross labor supply wage parameter will differ according to whether the wife works, and that the difference indicates the sign of the compensated cross-price effect. The results also show that for older persons, the nonmarket time of the husband and the nonmarket time of the wife are complementary in consumption. Finally, evidence shows that an aggregation bias may occur in estimating labor supply functions for married men.
Bibliography Citation
Kniesner, Thomas J. "An Indirect Test of Complementarity in a Family Labor Supply Model." Econometrica 44,4 (July 1976): 651-669.
15. Manski, Charles F.
Pepper, John V.
Monotone Instrumental Variables: With an Application to the Returns to Schooling
Econometrica 68,4 (July 2000): 997-1010.
Also: http://www.jstor.org/stable/2999533
Cohort(s): NLSY79
Publisher: Blackwell Publishing, Inc. => Wiley Online
Keyword(s): Schooling; Treatment Response: Monotone, Semimonotone, or Concave-monotone; Variables, Independent - Covariate; Variables, Instrumental

Introduction: For fifty years econometric analyses of treatment response have made extensive use of instrumental variable (IV) assumptions holding that mean response is constant across specified subpopulations of a population of interest. Yet the credibility of mean independence conditions and other IV assumptions has often been a matter of considerable disagreement, with much debate about whether some covariate is or is not a "valid instrument" in an application of interest. There is therefore good reason to consider weaker but more credible assumptions. To this end, we introduce monotone instrumental variable (MIV) assumptions holding that mean response varies weakly monotonically across specified subpopulations. We study the identifying power of these MIV assumptions and give an empirical application. The findings reported here add to the literature developing nonparametric bounds on treatment effects.
Bibliography Citation
Manski, Charles F. and John V. Pepper. "Monotone Instrumental Variables: With an Application to the Returns to Schooling." Econometrica 68,4 (July 2000): 997-1010.
16. Rosen, Harvey S.
Taxes in a Labor Supply Model with Joint Wage Hour Determination
Econometrica 44,3 (May 1976): 485-507.
Also: http://www.jstor.org/stable/1913978
Cohort(s): Mature Women
Publisher: Department of Economics, Northwestern University
Keyword(s): Family Income; Taxes; Wage Determination; Wives

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

Using cross-section data on white married women for the year 1976, a model of labor supply which permits statistical estimation of a "coefficient of tax perception" is studied. The model allows for the possibility that the wage may depend upon the number of hours worked. The results suggest that marginal tax rates have an important impact on labor market behavior.
Bibliography Citation
Rosen, Harvey S. "Taxes in a Labor Supply Model with Joint Wage Hour Determination." Econometrica 44,3 (May 1976): 485-507.
17. Rosenzweig, Mark R.
Wolpin, Kenneth I.
Sisters, Siblings and Mothers: The Effect of Teen-age Childbearing on Birth Outcomes in a Dynamic Family Context
Econometrica 63,2 (March 1995): 303-326.
Also: http://www.jstor.org/stable/2951628
Cohort(s): Children of the NLSY79, NLSY79
Publisher: Blackwell Publishing, Inc. => Wiley Online
Keyword(s): Adolescent Fertility; Age at Birth; Birth Outcomes; Birthweight; Childbearing, Adolescent; Heterogeneity; Kinship; Modeling, Fixed Effects; Modeling, Instrumental Variables; Pre-natal Care/Exposure; Pre/post Natal Behavior; Pre/post Natal Health Care; Siblings; Sisters

A statistical model of dynamic intrafamily investment behavior incorporating endowment heterogeneity is estimated to evaluate alternative estimation procedures that have exploited family and kinship data. These procedures, which place alternative restrictions on the endowment structure and on behavior, include generalized least squares, instrumental-variables, fixed-effects based on the children of sisters, fixed-effects based on siblings, and sibling fixed-effects with instrumental variables. The framework is applied to data on birth outcomes, with focus on the effects of teen-age childbearing net of other maternal behavior. The empirical results imply that the least restrictive statistical formulation, consistent with dynamic behavior and heterogeneity among siblings, fits the data best. All of the estimation procedures that control for a family-specific endowment indicate, however, that the biological effect of having a birth at younger ages is to marginally increase birthweight and to increase fetal growth.
Bibliography Citation
Rosenzweig, Mark R. and Kenneth I. Wolpin. "Sisters, Siblings and Mothers: The Effect of Teen-age Childbearing on Birth Outcomes in a Dynamic Family Context." Econometrica 63,2 (March 1995): 303-326.
18. Wolpin, Kenneth I.
Estimating a Structural Search Model: The Transition from School to Work
Econometrica 55,4 (July 1987): 801-818.
Also: http://www.jstor.org/stable/1911030
Cohort(s): NLSY79
Publisher: Blackwell Publishing, Inc. => Wiley Online
Keyword(s): Job Search; Modeling; Unemployment; Wages, Reservation

This paper presents a job search model that is econometrically implemented using all the restrictions that are implied by job search theory, and it provides a statistical test of those restrictions. The usefulness of this approach is that it provides a check on the internal consistency of the model as revealed by the data; i.e., one can verify the extent to which the internal logic of the theory misrepresents the data. The most interesting experiment is related to the impact of a change in the offer probability schedule on reservation wages and working probabilities. On the whole, working probabilities are not very sensitive to changes in offer probabilities, given the other parameter estimates. It would therefore be misleading to conclude that it is the rarity of offers that causes long durations of unemployment because an increase in offer probabilities alone will not reduce the duration. There exist combinations of parameters which would lead to greater sensitivity of working probabilities to offer probabilities, but evidently those combinations do not fit the data as well as the parameters estimated here.
Bibliography Citation
Wolpin, Kenneth I. "Estimating a Structural Search Model: The Transition from School to Work." Econometrica 55,4 (July 1987): 801-818.