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Author: Ong, Pinchuan
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1. Ong, Pinchuan
Essays in Labor and Applied Microeconomics
Ph.D. Dissertation, Department of Economics, Northwestern University, 2020
Cohort(s): NLSY79
Publisher: ProQuest Dissertations & Theses (PQDT)
Keyword(s): Australia, Australian; British Household Panel Survey (BHPS); Child Support; Cross-national Analysis; Panel Study of Income Dynamics (PSID); Swiss Household Panel; Wage Dynamics

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

The first essay estimates the Frisch elasticity, sometimes known as the wage elasticity of labor supply in response to anticipated wage changes. Despite its importance in macroeconomic and public finance models, its estimation requires a setting that is difficult to find; as a result, we have little quasi-experimental evidence on its magnitude. In the essay, I explain why child support---tax-like payments from noncustodial parents towards custodial parents in cases of divorce and nonmarital births---satisfies the two key features lacking in almost all settings that other researchers have looked at in the past. Specifically, we require that individuals anticipate their future effective wage in advance, satisfied because it is common knowledge that child support payments end on emancipation of the youngest eligible child, and exogeneity, satisfied if we believe that the ages of these children (who live away from the payers) do not directly affect the labor supply decision. Exploiting these two features, I estimate the Frisch elasticity in an event study design using individual-level panel data from four countries. Empirically, I find that the observed child support rate that fathers face drops to nearly zero upon emancipation of the children; correspondingly, these fathers increase their work hours and earnings at this time. Based on these results, I estimate Frisch elasticities of 0.7 to 0.8 on the intensive margin and 0.1 to 0.2 on the extensive margin.
Bibliography Citation
Ong, Pinchuan. Essays in Labor and Applied Microeconomics. Ph.D. Dissertation, Department of Economics, Northwestern University, 2020.