THE RELATIONSHIP BETWEEN HOURS OF WORK AND LABOR-FORCE PARTICIPATION IN 4 MODELS OF LABOR SUPPLY BEHAVIOR

This article analyzes the relationship between hours of work and labor force participation (LFP) in Heckman's model, Cogan's fixed-cost mode , Moffitt's minimum hours constraint model, and a generalized version of Heckman's model. First, the parameter restrictions between the LFP and reduced-form hours-of-work equations are compared. The models are then estimated, and the results support the weakening of the link betw een the LFP and hours-of-work decisions. One implication of the analys is is that Heckman's model overstates the standard labor supply elasti cities because it confounds the direct effect on labor supply with the participation effect.