Employment Behaviour of Marginal Workers: The Roles of Preferences and Opportunities

We use structural estimation techniques to analyse labour supply effects of changes in economic incentives for individuals who have just finished vocational rehabilitation in Norway. The complicated and sometimes non-convex budget sets for this group of marginal workers are accounted for. We also focus on the limitation in the choice sets this group faces. Parametric bootstrap and simulation techniques are applied to construct confidence intervals for the predicted impacts of changes in the economic environment. The results show that there is a small to moderate effect of changes in economic incentives on the chance of vocational rehabilitation bringing individuals back to employment. We also find that individual health status and local labour market conditions are the most important factors affecting the transition from rehabilitation to work. Copyright 2008 The Author. Journal compilation 2008 CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd.

Rising family income inequality in the United States, 1968-2000: impacts of changing labor supply, wages, and family structure

This study estimates what fraction of the rise in family income inequality in the United States between 1968 and 2000 is accounted for by the change in each of the family income components, such as wages, employment, hours of work of family heads and spouses, family structure, and other incomes. The increased disparities in other incomes and labor supply account for 29% and 28%, respectively, of the rise in the difference in incomes between the top 10% and bottom 10% families. Structural changes in wages, largely regarded as the major culprit for the increase in income inequality, explain less than a quarter of the rise in the measure of family income inequality. Changing fractions of families with both husband and wife and changes in the composition of the income sources account for 11% and 16%, respectively, of the widening income gap. The relative importance of the effect of changing labor supply declined over time, while that of wage changes increased. For the upper half of the income distribution, wage changes were the dominant cause of the increase in the gap between the richest 10th and middle-income families. In sharp contrast, changes in labor supply and other incomes were the principal causes of the growing distance between the poor and middle-income families for the lower half of the income distribution.income distribution, inequality, employment, hours of work, wage,