
doi: 10.1086/260065
In studies of the labor supply function, alternative measures have been used for the quantity of labor supplied. Data are available now on weekly hours in a specific week, weekly hours in a "normal week," weeks worked during the year, and labor-force participation (measured generally on a weekly reference period). Some of the more important studies of labor supply of the last few years have used labor-force participation (LFP) as the measure of labor supply. This can be done either with grouped data for cities or years where the variable to be explained is the labor-force participation rate (LFPR) or in individual data where participation is indicated by a dummy variable. The independent variables in such studies are the wage rate and "other income" (plus demographic and geographic control variables). The estimates of wage elasticity obtained from equations like (1) have often been decomposed into a substitution and an income effect, using the Slutzky equation (2).
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