Estimating the Extensive Margin of Youth Labor Supply

Shota Araki

April 2013


This study aims to estimate parameters of the youth labor force participation model and the responsiveness of the extensive margin of labor supply to wage. The formulation of our model includes a simultaneously on household income and labor force participation. The contribution of this study is obtaining the parameter estimates free from the bias arising from the endogeneity of the household income. The main findings in this study are following. First, under the assumption that the household income is exogenous, the effect of the wage estimate is upward biased. Second, the wage elasticity of extensive margin of youth labor force participation is 0.06. Third the extensive margin of female is higher than male. Fourth, the lower educated parsons' extensive margin is higher.

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