State Dependence and Female Labor Supply in Germany: The Extensive and the Intensive Margin

Discussion Papers 538, 22 S.

Peter Haan

2005. Dez.

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In this paper I develop an intertemporal discrete choice model of labor supply. The framework incorporates the nonlinearities in the household budget set and accounts for state dependence in labor supply. Based on panel data for Germany (SOEP), I estimate this model using a dynamic conditional logit panel data model with random effects. The estimation results show that state dependence is significantly positive at the extensive margin, yet modest or non existing on the intensive margin. Using the Markov chain property, I derive short and long term labor supply elasticities on both the intensive and extensive margin. The labor supply elasticities differ significantly between the short and long run.

Peter Haan

Head of Department in the Public Economics Department

JEL-Classification: C25;C33;J22
Keywords: State dependence; Labor supply of married women; Panel data; Unobserved heterogeneity
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