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Author: Cook, Eric William
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1. Cook, Eric William
A Variable Coefficients Analysis of Young Men's Labor Supply Using the National Longitudinal Survey
Ph.D. Dissertation, Florida State University, 1983. DAI-A 44/06, p. 1855, December 1983
Cohort(s): Young Men
Publisher: UMI - University Microfilms, Bell and Howell Information and Learning
Keyword(s): Data Analysis; Endogeneity; Heterogeneity; Labor Supply; Monte Carlo; Research Methodology; Statistical Analysis

This study measured the determinants of men's labor supply behavior by integrating the use of high quality labor market data with the best of both empirical and theoretical labor supply modeling. The ten year histories of men's labor market behavior associated with the National Longitudinal Survey of Young Men permitted the use of the random coefficients regression (RCR) model which relaxed the usual assumption of homogeneity of individuals' labor supply behavior. This innovation was combined with the best econometric and theoretical features from previous empirical research in order to assess men's labor supply behavior more accurately. There were several important findings of this study. First, when individuals' coefficients were different, a Monte Carlo experiment proved that the RCR estimator was substantially more accurate than both the OLSP and OLSA estimators. Second, the degree of heterogeneity in individuals' labor supply coefficients and variances was found to be so large as to require recognition. This indicated that the OLSP, OLSA, and GLSH estimators were not efficient. Third, the final results were sensitive to: (1) the omission of education from the labor supply equation; (2) the use of a non-random sample; and (3) not adjusting the estimation method to account for the endogenous explanatory variables in the labor supply equation. Fourth, the coefficient and elasticity estimates indicated individuals' responsiveness to changes in both the wage rate and income was extremely low. This estimated inelasticity was even more pronounced than the inelastic labor supply estimates obtained in previous empirical research. Finally, it was found that the variations in individuals' labor supply coefficient responses were significantly explained by a number of background variables. The emphasis upon individuals' heterogeneity in labor supply behavior was an important contribution of this study for empirical modeling in this area. Since the theory of labor supply begins at the individual level, empirically modeling individual differences represents a coalescence of theory with the econometric application which heretofore has not been attempted.
Bibliography Citation
Cook, Eric William. A Variable Coefficients Analysis of Young Men's Labor Supply Using the National Longitudinal Survey. Ph.D. Dissertation, Florida State University, 1983. DAI-A 44/06, p. 1855, December 1983.