Dealing with negative marginal utilities in the discrete choice modeling of labor supply

C-Tier
Journal: Economics Letters
Year: 2013
Volume: 118
Issue: 1
Pages: 16-18

Authors (2)

Liégeois, Philippe (not in RePEc) Islam, Nizamul (Luxembourg Institute of Socio-...)

Score contribution per author:

0.505 = (α=2.02 / 2 authors) × 0.5x C-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

In discrete choice labor supply analysis, it is often reasonably expected that utility will increase with income. Yet, analyses based on discrete choice models sometimes mention that, when no restriction is imposed a priori in the optimization program, the monotonicity condition is not fully satisfied ex post. In order to overcome this limitation, some authors impose restrictions that may appear to be excessively severe. As an alternative, the present paper shows how to simply complete the standard maximum likelihood program in order to derive an optimum that may lead to positive marginal utilities only.

Technical Details

RePEc Handle
repec:eee:ecolet:v:118:y:2013:i:1:p:16-18
Journal Field
General
Author Count
2
Added to Database
2026-02-02