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Title: Fixed Costs and Labor Supply
Resulting in 1 citation.
1. Cogan, John F.
Fixed Costs and Labor Supply
Econometrica 49,4 (July 1981): 945-963.
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.