Loss aversion and adaptation in the labor market: empirical indifference functions and labor supply
Article Abstract:
An analysis of data on seven diverse labor markets shows that the empirically determined indifference functions for income and leisure reflect loss aversion phenomena and exhibit a utility reference point determined by adaptation. All indifference functions manifest common features that are consistent with loss aversion/adaptation. Such features aid in the explanation of stability in labor markets when an overtime premium prevents myriads of workers from achieving optimal equilibrium and results in labor supply curve discontinuities. Labor supply curves derived from indifference curves with loss aversion/adaptation features were found to have significantly smaller discontinuities than those based on simulated curves without such features.
Publication Name: Review of Economics and Statistics
Subject: Mathematics
ISSN: 0034-6535
Year: 1996
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Cross-national differences in the rise in earnings inequality: market and institutional factors
Article Abstract:
The relationship between differences in supply shifts and cross-national differences in the increase in income inequality was investigated. Data from the Luxembourg Income Study were analyzed and changes in returns to education and age were estimated for eight countries. Empirical results showed that larger shifts in relative labor supply of older workers are correlated to smaller increases in the age premium. On the other hand, there is no association between increases in the education premium and increases in the relative supply of workers with more education.
Publication Name: Review of Economics and Statistics
Subject: Mathematics
ISSN: 0034-6535
Year: 1998
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Category versus continuous survey responses in economic modelling: Monte Carlo and empirical evidence
Article Abstract:
An analysis of survey responses in economic models is presented. The selection of a format for survey response effects a tradeoff between information content and measurement error. Estimation precision is evaluated using a Monte Carlo study and ordinary least squares (OLS) estimates. It is shown that both methods exhibited more accuracy for continuous data than category data.
Publication Name: Review of Economics and Statistics
Subject: Mathematics
ISSN: 0034-6535
Year: 1993
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