DMCA
Bayesian Analysis of a Dynamic Stochastic Model of Labor Supply and Saving (1999)
| Venue: | Journal of Econometrics |
| Citations: | 12 - 2 self |
BibTeX
@TECHREPORT{Houser99bayesiananalysis,
author = {Daniel Houser},
title = {Bayesian Analysis of a Dynamic Stochastic Model of Labor Supply and Saving},
institution = {Journal of Econometrics},
year = {1999}
}
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Abstract
This paper empirically implements a dynamic, stochastic model of life-cycle labor supply and human capital investment. The model allows agents to be forward looking. But, in contrast to prior literature in this area, it does not require that expectations be formed "rationally." By avoiding strong assumptions about the way people form expectations I avoid sources of bias stemming from misspecification of the expectation process. The analysis focuses on the age-hours profile of young men and uses data drawn from the National Longitudinal Survey of Youth. An econometric method suggested by Geweke and Keane (1999) is used to relax assumptions over expectations. The results of this study are consistent with previous results reported in the human capital and labor supply literature. In particular, I find no evidence that the rational expectations assumption has distorted our understanding of the labor supply process of young men. KEYWORDS: Life-cycle, labor supply, human capital, expectations
Keyphrases
labor supply bayesian analysis dynamic stochastic model young men human capital econometric method rational expectation assumption way people labor supply process age-hours profile data drawn labor supply literature stochastic model national longitudinal survey human capital investment expectation process strong assumption previous result life-cycle labor supply
