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Title: Youth Labor Supply and the Minimum Hours Constraint
Resulting in 1 citation.
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Chen, Yu-Hsia |
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Youth Labor Supply and the Minimum Hours Constraint Ph.D. Dissertation, The Ohio State University, 1986 Cohort(s): NLSY79 Publisher: UMI - University Microfilms, Bell and Howell Information and Learning Keyword(s): Income; Labor Supply; Legislation; Minimum Wage; Rural/Urban Migration; Wages The purpose of this study is to test whether employers offer minimum hours of work, H('d), because of the fixed costs of hiring new workers and minimum wage law. If they do, the standard approach of estimating labor supply functions, which assumes that an individual can always choose his desired hours of work, will result in biased estimation, and in misleading policy implications, as the data of actual hours of work are treated as desired hours of work, while they might simply be the minimum working hours required by employers. The sample, from the 1982 NLSY, contains 194 individuals who are male, single, and high school terminal graduates in 1978 or 1979. The model with the minimum hours constraint (MWMHC) started with a linear labor supply function and a linear minimum hours (H('d)) function. The model without the minimum hours constraint (MOMHC) can be obtained from MWMHC by setting H('d) = 0. The parameters in both models were estimated by the maximum likelihood method. The likelihood ratio test was then used to test the hypothesis that there is no minimum hours constraint, which was rejected. Thus, one will get biased estimates of labor supply functions, at least for youth, if the minimum hours constraint is not taken into consideration. It was shown in MOMHC that the wage and income coefficients estimates are underestimated. As wage rates increase, the increase in minimum hours offered is less than that of desired hours of work. For those individuals working at H('d) hours, the increase in wage rate will increase their actual hours of work less than that of H('s) through the increase in H('d). Consequently, the wage coefficient estimate obtained in MOMHC will be in general underestimated. Similarly, for those individuals working H('d) hours, their actual hours of work stay intact when their nonlabor income changes. This implies underestimation of the income coefficient. |
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Bibliography Citation
Chen, Yu-Hsia. Youth Labor Supply and the Minimum Hours Constraint. Ph.D. Dissertation, The Ohio State University, 1986. |