Family structure and female labour supply in Mexico City
This paper investigates labour supply of married women in Mexico City. A static neoclassical structural mode is used. We assume that each woman chooses her labour supply and corresponding income so that her utility is maximized, conditional upon her husband's labour supply and earnings. We use a direct translog specification, and include family composition variables as taste shifters. Also taken into account are fixed costs of working, random preferences, and correlation between error terms in wage equations and random preference terms. The wage equation and the labour supply model are estimated jointly by smooth simulated maximum likelihood. We find income elasticities of labour supply of about -0.17, and wage elasticities of about 0.87. The latter is substantially underestimated if the correlation between wage equation errors and random preference terms is not taken into account. We find evidence that the presence of other adult females reduces the negative impact of young children on the mothers' labour supply.
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adult females analysis Arthur van Soest average hours benchmark model C. M. Schmidt Censored regression models chdofem choice set Composition No child confidence intervals correlation between ew correlation between wage discrete choice distribution Dustmann Econometrics education level effects error terms estimated Euwals Family Labour Supply family structure Female Labour Supply Figure fixed costs fixed revenues Gong Hausman hours per week husband Immigrants income elasticities income tax system increases indifference curves IZA Discussion Papers labor economics labour force participation Labour Supply Curve labour supply model logit model Low education marginal utility Mexico City mothers multinomial logit normally distributed number of adults number of points numbers of hours OECD Panel Data parameters participation rates partition pesos Policy Pr[h random preference terms simulated maximum likelihood specification structural labour supply structural model subsamples T. K. Bauer Table test statistic Tilburg University translog Unemployment utility function Villagomez wage elasticities whole sample wives