Lifecycle consistent estimation of effect of taxes on female labor supply in the U.S.
Subtitle: evidence from panel data
By: Anil Kumar.
Series: Research Department working paper ;; 0504; Working paper (Federal Reserve Bank of Dallas. Research Dept. : Online) ;; 0504.
Publisher: Federal Reserve Bank of Dallas
Published: 2005
Place of publication: [Dallas, Tx.]
Language: eng
Format: Electronic resource
Subjects: Labor supply -- Effect of taxation on -- Econometric models.; Women employees -- Econometric models.; Married women -- Employment -- Econometric models.
Description: "Very few existing studies have estimated female labor supply elasticities using a U.S. panel data set, though cross-sectional studies abound. Also, most existing studies have modeled female labor supply in the U.S. in a static framework. I make an attempt to fill the gap in this literature, by estimating a lifecycle-consistent specification with taxes, in a limited dependent variable framework, on a panel of married females from the PSID. Both parametric random effects and semiparametric fixed effects methods are applied. The estimate of compensated elasticity for females in the sample is 0.63 (with a standard error of 0.14). These estimates are fairly robust to the choice of both random effects and semiparametric fixed effect estimators and also to the choice of instruments for the endogenous net wage and virtual full income. I estimate exact deadweight loss from taxes and find that deadweight loss from a 20 percent increase in the marginal tax rate is about 18 percent of tax revenue collected, evaluated at the sample mean"--Federal Reserve Bank of Dallas web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 4/2/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.