Desired and Actual Labour Supply of Unmarried Men and Women in the Netherlands

Desired and actual working hours of unmarried adults are analyzed.A discrete structural neoclassical model is used to explain desired hours.Desired hours depend on gross wage rates, tax and benefit rules, other income, and some background variables.The model takes account of fixed costs of working and of prediction errors in wage rates of nonworkers.Actual hours are explained from desired hours and hours restrictions.Deviations between actual and desired hours are used to identify equations for involuntary unemployment and the lack of part-time jobs.Explanatory variables include age, education level, and the difference between potential earnings and some reference (minimum) wage.The model is estimated using cross-section data from the October 1988 wave of the Dutch Socio-Economic Panel.We find larger wage elasticities of desired hours of work for females than for males.People with potential earnings below their reference wage have a significantly larger probability of involuntary unemployment than others.Apart from involuntary unemployment, the lack of part-time jobs appears to be an important source of hours restrictions.