FEMALE LABOR SUPPLY WITH A DISCONTINUOUS, NONCONVEX BUDGET CONSTRAINT- INCORPORATION OF A PART-TIME FULL-TIME WAGE DIFFERENTIAL/

This paper incorporates the well-documented part-time/full-time wage d ifferential into an empirical labor supply model with both a heterogen eity- and a random-error term and estimates that model for women in th e United States. Incorporation of the part-time/full-time wage differe ntial results in a unique discontinuous, nonconvex budget set, and the consideration of estimation procedures previously unconfronted in the nonlinear budget constraint literature. The full structural represent ation of the budget constraint is shown to ''fit'' better than the alt ernative models estimated, and to yield a predicted hours distribution representative of actual hours.