Full- and part-time wage differentials and female labor supply : discontinuous budget constraint and endogenous wages

Myeong-Su Yun (Department of Economics, University of Western Ontario, London, Ontario, Canada)

We introduce a structural model which jointly estimates the full-time wage premium and female labor supply, using the piecewise-linear budget constraint method. Our model incorporates a discontinuous budget line at cut-off hours (35 hours a week), caused by the coexistence of both full- and part-time wage rates, and makes wages fully endogenous to the labor supply choice. We estimate a structural model using the female sample from March 1995 current population survey. The estimate of the full-time premium from our structural model is slightly larger than that of OLS, while Heckman's two-step method predicts a small full-time wage premium. Our estimates for labor supply elasticities lie within the ranges reported in previous research.

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Year of publication:	July 10, 2000
Authors:	Yun, Myeong-Su
Publisher:	New Brunswick, NJ : Rutgers University, Department of Economics
Subject:	discontinuous budget line \| endogenous wages \| female labor supply \| full-time wage premium \| piecewise-linear budget constraint method \| Weibliche Arbeitskräfte \| Women workers \| Arbeitsangebot \| Labour supply \| Lohnstruktur \| Wage structure \| Schätzung \| Estimation \| Theorie \| Theory \| Lohn \| Wages \| Budgetrestriktion \| Budget constraint \| Teilzeitarbeit \| Part-time employment \| Fraueneinkommen \| Women's earnings