USING DATA ON ADULT MALE WORKERS, THE AUTHORS INVESTIGATE THE INCREMENTAL EFFECT OF 1 YEAR OF SCHOOLING ON UNEMPLOYED HOURS. THEY NEXT TEST WHETHER UNEMPLOYED HOURS REPRESENT REAL CONSTRAINTS ON WORKER BEHAVIOR. RESULTS IMPLY THAT PERHAPS THREE-QUARTERS OF THE UNEMPLOYED HOURS OF MALE WORKERS ARE PART OF THE OFFER TO SELL LABOR.
"The NBER Bulletin on Aging and Health provides summaries of publications like this. You can sign up to receive the NBER Bulletin on Aging and Health by email. Economists have devoted considerable resources to estimating local average treatment effects of expansions in Medicaid eligibility for children. In this paper we use random coefficients linear probability models and switching probit models to estimate a more complete range of effects of Medicaid expansion on Medicaid take-up and crowd-out of private insurance. We demonstrate how to estimate, for Medicaid expansions, the average effect among all of those eligible, the average effect for a randomly chosen person, the effect for a marginally eligible child, and the average effect for those affected by a nonmarginal counterfactual policy change. We then estimate the average effect of Medicaid expansions among all eligible children and the average effect for those affected by a nonmarginal counterfactual Medicaid expansion since these are likely to be the most useful for policy analysis. Estimated take-up rates among average eligible children are substantially larger than take-up rates for those made eligible by a counterfactual Medicaid expansion, moreover both of these effects vary widely across demographic groups. In terms of crowd-out, we find statistically significant, though small, effects for all eligible children, but not for those affected by a counterfactual policy change"--National Bureau of Economic Research web site
"Using data on adult male workers, we first investigate the incremental effect of 1 year of schooling on unemployed hours and use this calculation to explain the difference in the proportional effects of schooling on earnings and wages. Schooling apparently reduces unemployed hours by reducing the incidence of unemployment spells, but it does not significantly affect their duration. We next test whether unemployed hours represent real constraints on worker behavior. To do this we develop and estimate life-cycle models of labor supply for workers with and without spells of unemployment, using longitudinal data. The results imply that perhaps threequarters of the unemployed hours of male workers are part of the offer to sell labor." (author's abstract)
We present new tests of three theories of the labor market: intertemporal substitution, hours restrictions, and implicit contracts. The intertemporal substitution test we implement is an exclusion test robust to many specification errors and we consistently reject this model. We model hours restrictions as part of an endogenous switching model. We compare the implicit probit equation to an unrestricted probit equation for unemployment and reject the hours restriction model. For the implicit contracts model, we estimate nonseparable within-period labor-supply and consumption equations. We test a cross-equation restriction of the model and cannot reject the implicit contracts model.