Female Labor Supply with a Discontinuous, Nonconvex Budget Constraint: Incorporation of a Part-Time/Full-Time Wage Differential

The Review of Economics and Statistics, Vol. 79, No. 3, August 1997

Posted: 20 Apr 1998

See all articles by Susan L. Averett

Susan L. Averett

Lafayette College - Department of Economics & Business

Julie L. Hotchkiss

Federal Reserve Bank of Atlanta; Georgia State University - Department of Economics

Abstract

This paper incorporates the well documented part-time/full-time wage differential into an empirical labor supply model with both a heterogeneity- and a random-error term and estimates that model for women in the United States. Incorporation of the part-time/full-time wage differential results in a unique discontinuous, nonconvex budget set, and the consideration of estimation procedures previously unconfronted in the nonlinear budget constraint literature. The full structural representation of the budget constraint is shown to "fit" better than the alternative models estimated and to yield a predicted hours distribution representative of actual hours.

JEL Classification: J22

Suggested Citation

Averett, Susan and Hotchkiss, Julie L., Female Labor Supply with a Discontinuous, Nonconvex Budget Constraint: Incorporation of a Part-Time/Full-Time Wage Differential. The Review of Economics and Statistics, Vol. 79, No. 3, August 1997. Available at SSRN: https://ssrn.com/abstract=78029

Susan Averett

Lafayette College - Department of Economics & Business ( email )

Easton, PA 18042
United States
610-250-5307 (Phone)
610-250-8961 (Fax)

Julie L. Hotchkiss (Contact Author)

Federal Reserve Bank of Atlanta ( email )

Research Department
1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States
404-498-8198 (Phone)
404-498-8058 (Fax)

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States

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