Labor Supply Elasticities: Overcoming Nonclassical Measurement Error Using More Accurate Hours Data

14 Pages Posted: 19 Dec 2016

See all articles by Garry F. Barrett

Garry F. Barrett

University of Sydney

Daniel S. Hamermesh

University of Texas at Austin - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

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Abstract

We measure the impact of measurement error in labor-supply elasticities estimated over recalled usual work hours, as is ubiquitous in the literature. Employing hours of work in diaries collected by the American Time Use Survey, 2003-12, along with the same respondents' recalled usual hours, we show that the latter yield elasticities that are positively biased. We argue that this bias arises from the salience on recalled hours of differences in wage rates.

Keywords: time use, measurement error, labor supply

JEL Classification: J22, C21

Suggested Citation

Barrett, Garry F. and Hamermesh, Daniel S., Labor Supply Elasticities: Overcoming Nonclassical Measurement Error Using More Accurate Hours Data. IZA Discussion Paper No. 10404, Available at SSRN: https://ssrn.com/abstract=2886775

Garry F. Barrett (Contact Author)

University of Sydney ( email )

Rm 370 Merewether (H04)
The University of Sydney
Sydney, NSW 2006 2008
Australia

Daniel S. Hamermesh

University of Texas at Austin - Department of Economics ( email )

Austin, TX 78712
United States
512-475-8526 (Phone)
512-471-3510 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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IZA Institute of Labor Economics

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Germany

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