Essays on Labor Supply and Poverty: A microeconometric application

Sammanfattning: This thesis consists of four papers in applied micro econometrics. The first paper evaluates the discrete choice labor supply Model by Monte Carlo experiment. The 2nd paper investigates the relationships between participation decisions and both the fertility decision and women's non-labor income. The third paper analyses the relationship between hours of work and fertility The first paper is based on Monte Carlo simulation in order to evaluate the properties of discrete choice labor supply model. The data is generated by a continuous model and a discrete choice model is estimated assuming a translog utility function. The robustness of the results for different number of points in the discrete choice set, as well as for measurement errors in income and hours are compared. The discrete model produces similar results as the "true" continuous model and apart from large measurement errors in hours these results are robust. The second paper analyzes the inter-temporal labor force participation behavior of married women in Sweden. A dynamic probit model is applied, controlling for endogenous initial condition and unobserved heterogeneity, using longitudinal data to allow for a rich dynamic structure. Significant unobserved heterogeneity is found, along with serial correlation in the error components, and negative state dependence. The findings may indicate serial persistence due to persistent individual heterogeneity. The third paper investigates the dynamic effects of having children on women's hours of work decision. A dynamic Tobit model is applied to longitudinal data to estimate the hours of work of married women in Sweden during 1992-2001. Hours of work are found to be negatively related to fertility. Other characteristics of married women are also found to have an effect on labor supply. Inter- temporal labor supply decisions seemed to be characterized by a substantial amount of unobserved heterogeneity, first order state dependence and serially correlated error components. The findings suggest that the first order state dependence and unobserved heterogeneity are very sensitive to the initial condition. The fourth paper focuses on the persistency of poverty in rural and urban households in Ethiopia by estimating dynamic probit models. The empirical results find that the risk of poverty increases with the number of household's size. The results also find that the land size is highly correlated (negatively) with the risk of poverty. The most important cash crops (Coffee and Chat) has significant role in the alleviation of poverty in Ethiopia. The effect of true state dependence and transitory shocks in poverty persistency appears to be stronger among urban households than rural households.