TY - JOUR
T1 - Testing intertemporal substitution, implicit contracts, and hours restriction models of the labor market using micro data
AU - Ham, John C.
AU - Reilly, Kevin T.
PY - 2002/9
Y1 - 2002/9
N2 - 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. (JEL E30, J22, J60).
AB - 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. (JEL E30, J22, J60).
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U2 - 10.1257/00028280260344524
DO - 10.1257/00028280260344524
M3 - Article
AN - SCOPUS:0040673910
SN - 0002-8282
VL - 92
SP - 905
EP - 927
JO - American Economic Review
JF - American Economic Review
IS - 4
ER -