The Hausman-MaCurdy Controversy - Why Do Results Differ Between Studies?

The two perhaps most influencial empirical labor supply studies carried out in the US in recent years, Hausman (1981) and MaCurdy, Green & Paarsch (1990), report sharply contradicting labor supply estimates.In this paper we seek to uncover the driving forces behind the seemingly irreconcilable results. Our findings suggest that differences with respect to the estimated income and wage effects can be attributed to the use of differing nonlabor income and wage measures.