Volume 37, Number 1 (Winter) 2002
Gong, Xiaodong, and Arthur van Soest. 2002. "Family Structure and female Labor Supply in Mexico City." Journal of Human Resources 37(1):163-191.
We investigate labor supply of married women in Mexico City, using a static neoclassical structural model. By choosing her labor supply and corresponding income, each woman is assumed to maximize a direct translog utility function with family composition variables as taste shifters. We account for random preferences, their correlation with wage equation errors, and fixed costs of working. The wage equation and the labor supply model are estimated jointly by smooth simulated maximum likelihood. We find income elasticities of labor supply of about -0.17, and wage elasticities of about 0.87. The latter are underestimated if we ignore the correlation between wage equation errors and random preferences.
Xiaodong Gong is a research associate at the Institute for the Study of Labor (IZA), Germany and a research fellow at the Economics Group, Research School of Social Sciences, the Australian National University. Arthur Van Soest is a professor of econometrics at Tilburg University, the Netherlands. Elizabeth Villagomez is gratefully acknowledged for her help and for providing the data. Also thanked are Rob Euwals and an anonymous referee for their useful comments and suggestions. Research of the second author has been made possible by a fellowship of the Netherlands Royal Academy of Arts and Sciences (KNAW). The data used in this article can be obtained May 2002 through April 2005 from the authors.
© 2003 by the Board of Regents of the University of Wisconsin System
US ISSN 0022-166X