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Labor Supply and Taxation$
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Richard Blundell, Andreas Peichl, and Klaus F. Zimmermann

Print publication date: 2016

Print ISBN-13: 9780198749806

Published to Oxford Scholarship Online: June 2016

DOI: 10.1093/acprof:oso/9780198749806.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 24 October 2021

Unemployment and Female Labor Supply

Unemployment and Female Labor Supply

(p.110) 5 Unemployment and Female Labor Supply
Labor Supply and Taxation

Richard Blundell

John Ham

Costas Meghir

Oxford University Press

This chapter extends the standard ‘Tobit’ model of labour supply and participation by introducing the possibility that zero hours of work represent unemployment and not simply non-participation. The proposed Double-Hurdle model offers a framework for studying the effects of macroeconomic variables on labour force participation. This is achieved by modelling the probability that a particular individual obtains a job at his/her perceived market wage. The chapter applies the theory to a sample of married women drawn from the UK Family Expenditure Survey. The proposed model supplants the Tobit model as it provides a more realistic model of the labour market; the traditional model produces inconsistent estimates of labour supply parameters since individuals are mis-specified as non-participants. In addition, the chapter modifies the standard model of female labour supply to allow for unemployed workers who want to work but cannot find jobs in their perceived market wage.

Keywords:   unemployment, Tobit model, statistical model, labour market, labour supply parameters, non-participants, labour force statistics, labour market participants, market wage

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