Volume 26, Number 3 (Summer) 1991
Tummers, Martijn P. and Isolde Woittiez. 1991. "A Simultaneous Wage and Labor Supply Model with Hours Restrictions." Journal of Human Resources 26(3):393-423.
Two common assumptions in neoclassical labor supply models are relaxed by introducing hours restrictions and endogenous wages into a labor supply model. First, we incorporate the possibility that an individual is faced with a limited availability of jobs with different, distinct, numbers of hours. Moreover, the wage rate is allowed to depend on the number of working hours. The latter implies a nonlinear budget constraint. The model is estimated for data from a Dutch labor mobility survey. The results for females suggest not only the existence of hours restrictions, but also of a nonlinear budget constraint. Including both features generates a simulated hours distribution much more in line with the actual data than does a standard Tobit model.
Martijn P. Tummers is a PhD student of economics at Tilburg University, The Netherlands, and Isolde Woittiez is an assistant professor of economics at Leiden University, The Netherlands. The authors would like to thank Arie Kapteyn, Arthur van Soest, Marcel Kerkhofs, Theo Nijman, Peter Kooreman, and three anonymous referees for stimulating discussions and helpful comments. The Organization for Strategic Labor Market Research (OSA) is gratefully acknowledged for providing the data used in this article, which can be obtained beginning February 1992 through February 1995from the authors at the following address: Dept. of Econometrics, Tilburg University, P.O. Box 90153, NL-5000 LE Tilburg, The Netherlands.
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