The Importance of Sample Attrition in Life Cycle Labor Supply

J.P. Ziliak, T.J. Kniesner

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    Abstract

    We examine the importance of possible non-random attrition to an econometric model of life cycle labor supply including joint nonlinear taxation of wage and interest incomes and latent heterogeneity.We use a Wald test comparing attriters to nonattriters and variable addition testing based on formal models of attrition.Results from the Panel Study of Income Dynamics are that non-random panel attrition is of little concern for prime-aged male labor supply estimation because the effect of attrition is absorbed into the fixed effects.Attrition is less econometrically influential than research design decisions typically taken for granted; the wage measure or instrument set has a much greater impact on the estimated labor supply function of prime-aged men than how one includes panel attrition.
    Original languageEnglish
    Place of PublicationTilburg
    PublisherVakgroep CentER
    Number of pages25
    Volume1996-46
    Publication statusPublished - 1996

    Publication series

    NameCentER Discussion Paper
    Volume1996-46

    Keywords

    • panel data
    • labour supply
    • econometric models
    • income tax
    • GMM

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