| The response of individual labor supply to wage rate and non labor income has been followed with interest by many foreign researchers for a long time. Labor supply wage elasticity and income elasticity can be used to evaluate the effect of public policies that were implemented to promote labor supply. However, domestic researchers have not given sufficient attention to labor supply elasticity because the deficiency of labor market microdata.In Chapter One, we review the development of labor supply theory, including static labor supply theory and lifecycle labor supply theory and present work hour equation specifications corresponding to each labor supply theory. Then, we introduce the concept of reservation wage and present reduced form labor participation equation specification and structure form labor participation equation specification. Because there exist individuals which do not work in labor market, it will cause sample select bias if we estimate work hour equation only based on the sample which consists of working individuals, so we introduce the method which is used to overcome the sample selection bias. Finally, we introduce two kinds of approaches that analyze the effect of economic policies on labor supply: behavioral microsimulation approach and natural experiment approach. The behavioral microsimultion includes continuous microsimultion and discrete microsimultion. The basis of continuous labor supply behavioral microsimulation is estimating work hour equation under the budget constraint which is non-linear resulted from public policies and the basis of discrete labor supply behavioral microsimulation is estimating the utility equation. The idea of natural experiment approach is putting the implementation of a public policy as a natural experiment and comparing the labor supply behavior of individuals before the implementation with that after the implementation to determine the effect of public policy on individuals'labor supply.In Chapter Two, we review the development of empirical studies on labor supply. First, we review empirical studies corresponding to static labor supply theory and lifecycle labor supply theory. Lifecycle labor supply wage elasticity is more appropriate than static labor supply wage elasticity when we evaluate the effect of public policies on labor supply. However, it needs much more individuals'information to estimate lifecycle labor supply equation than static labor supply equation, so there are fewer lifecycle labor supply empirical studies than static labor supply empirical studies. Because of disparities of datasets resulting from different periods and regions, specification forms of labor supply equation and so on, there are disparities among estimated labor supply wage elasticities, but researchers have reached an agreement about the fact that female work hour elasticity is bigger than male work hour elasticity. Then, we review empirical studies about labor participation. Researchers analyze labor participation behavior of individuals in two ways. One way is estimating reduced form labor participation equation to determine factors that affect labor participation of individuals, such as individual characteristics, family characteristics and economic situation and so on, and another way is estimating structural form labor participation equation to determine the effect of wage rate on labor participation. Next, we review empirical studies which determine the effects of different public policies on labor supply. Because of the complication of treating nonlinear budget constraints in continuous labor supply behavioral microsimulation, it is limited to analyze the effect of progressive income tax reform on labor supply for the reason that progressive income tax makes individuals'budget constraint becomes piece-wise linear and there exist a normalized procedure that evaluate the effect of progressive tax on labor supply with continuous labor supply behavioral microsimulation. Discrete labor supply behavioral microsimulation has been widely used to evaluate the effect of public policies on labor supply, because it is easy to treat non-linear budget constraints of individuals in it. Recently, natural experiment approach has played an important role in evaluating the effect of public policies. Researchers need cross-section data in behavioral microsimulation. However, researchers need pool data or repeated cross-section data in natural experiment. In addition, natural experiment approach can only be used to evaluate the effect of public policies which have been carried out, but behavioral microsimulation can be used to evaluate the effect of public policies which has not been implemented. Finally, we review labor supply empirical studies in China, including the changing trend of labor participation rate and the determinants of work hour and labor participation. Currently, there are few studies focusing on the effect of wage rate and non labor income on labor supply and the effect of public policies on labor supply.In Chapter Three, we focus on the labor participation behavior of China's urban residents. We first present labor participation parametric binary discrete choice model. A limitation to parametric binary discrete choice model is that error term in the model should be assumed to follow some parametric distribution. Although the parametric estimation is easily implemented, as Horowitz (1993) has noted, there is unlikely sufficient justification for assuming that the distribution of the error term belongs to a known parametric family, so we further present labor participation semi-parametric binary discrete choice model in which it is not necessary to assume the error term to follow some parametric distribution. Last, based on the microdata from Urban Resident Survey of China Household Income Project in 2002, we analyze the labor participation behavior of urban residents. The specification test can not reject the parametric model when we estimate labor participation equation of the whole population. The results show: female labor participation wage elasticity and income elasticity are 0.7130 and -0.0914 which are bigger than male labor participation wage elasticity and income elasticity which are 0.2038 and -0.0319, respectively. Therefore, public policies that increase female wage will promote female labor participation effectively. The specification test can reject the parametric model of five groups in eight when we estimate the labor participation equation of eight different income groups, so semi-parametric model is more robust. The results show: no matter female or male, labor participation wage elasticity is bigger than labor participation income elasticity within each group; female labor participation wage elasticity and income elasticity are bigger than male labor participation wage elasticity and income elasticity within each group; with income level increasing, no matter female or male, labor participation wage elasticity and income elasticity are decreasing and wage elasticity and income elasticity in low income group are bigger than wage elasticity and income elasticity in other income groups, respectively. Therefore, design and implementation of positive labor market policies for low income group will effectively promote labor participation of low income groupIn Chapter Four, we focus on work hour choice behavior of China's urban residents. van Soest (1995) classified work hour choice model into continuous model and discrete model according to the assumption that whether individuals can choose preferred work hour or not. We first present the specification of continuous model and discrete model. Then, we analyze work hour choice behavior of China'urban residents based on the data of Urban Residents'Survey Data of 2002CHIP with continuous model. The results show: female work hour wage elasticity and income elasticity which are 0.0389 and -0.0253 are a little bigger than male work hour wage elasticity and income elasticity which are 0.0286 and -0.0137. Compared with results from the empirical research which Li and Zax did with 1995CHIP in 2003, we conclude that work hour choice behavior of urban residents did not change much from 1995 to 2002. Last, we also analyze work hour choice behavior of China'urban residents based the Labor Survey Data in China Northeast in 2006 with discrete work hour choice model. The results show: female work hour wage elasticity and income elasticity which are 0.1568 and -0.0530 are bigger than male work hour wage elasticity and income elasticity which are -0.0229 and -0.0123. The response of the female work hour to wage rate and non labor income in 2006 is bigger than that in 2002 which shows female can choose work hour more freely. No matter female or male, work hour wage elasticity and income elasticity are smaller than labor participation wage elasticity and income elasticity obtained in Chapter Three which shows it is more important that focus on labor participation behavior rather than work hour choice behavior of urban residents.In Chapter Five and Six, we focus on evaluating the effect of public policies on labor supply. In Chapter Five, we put a series of employment support policies implemented by the government of Jilin Province as a natural experiment and analyze the effect of employment support policies on labor supply based on the panel data of individuals in 2005 and 2006. Because the employment support policies were implemented mainly for poor households, we put urban households whose income per capita is less than the minimum living security line into the treatment group and urban households whose income per capita is higher than the minimum living security line into the control group. Based on differences in differences estimator, we can analyze the change of the labor force participation and work hour of treatment group before and after the implementation of employment support policies. We first compare the labor supply change of treatment group before and after the implementation of policies without controlling the individuals'differences of treatment group and control group. Then we design the regression model to analyze the effect of employment support policies after controlling the differences of the treatment group and the control group. The results shows: labor supply wage elasticity of treatment group is so big that the employment support policies can significantly promote employment of poverty population, reduce urban poverty and the Government's minimum living security expenditure.In 2006 and 2008, the Chinese government increases the standard for the deduction of fees from the wages and salaries for the purpose of adjusting the income gap and promoting employment and stimulating domestic demand on the balance between revenue and expenditure. Whether these objectives can be achieved through increasing the standard and whether it is necessary to continue increasing the standard, there are still many controversies. In Chapter Six, we construct labor supply behavioral microsimulation model to analyze the effect of increasing the standard on labor supply of urban residents and further analyze the effect on income distribution and revenue. First, we present the labor supply model including the progressive income tax, and then we estimated work hour equations based on Survey Data from Jilin Province in 2006. Last, according to the work hour equation, we simulate work hour changes of urban residents when the standard is upgraded from 2000 yuan to 5000 yuan and further analyze changes of income distribution and revenue. The results show: with the standard increasing, labor supply of married women showed a slight upward trend; with the standard increasing, high income groups rather than low income groups benefit more and more, so income gap is widen; with the standard increasing, the scale of population who pay taxes gets smaller and smaller and this will lead to the decline of government tax revenues continuously.The results from the empirical analysis of this paper contribute to a better understanding of the labor supply behavior of urban residents and will be beneficial to the deign and implementation of public policies that were aimed to promoting employment of urban residents, alleviating urban poverty and adjusting income distribution.
|
PDF Full Text Request