An article “Family labor supply and wage shocks in an emerging market: Evidence from Russia” by Alexey Zamnius, a Researcher of the Mathematical Modeling and Economic Processes Department at the Gaidar Institute, has been published on ScienceDirect platform in English language.
ScienceDirect is the largest database of peer-reviewed journal articles and book chapters, providing access to scientific publications. The platform contains 2500 scientific journals and 26.000 ebooks. This paper is part of a special issue, "Econometric Analysis," published in the journal Emerging Markets Review.
The article estimates labor supply elasticities for men and women in Russia using a dynamic two-earner life-cycle model considering uncertainty in wages and mechanisms of intra-household consumption smoothing. To identify the parameters, a three-stage estimation procedure is used, which allows for taking into account measurement errors and separating permanent and temporary components of the unobserved part of income. The results obtained indicate presence of significant gender differences in both wage volatility and labor supply responses to income changes. It has been shown that intra-household insurance mechanisms play a more important role than individual changes in employment behavior, especially in low-income households. Furthermore, higher labor supply elasticity is typical for higher-income and more educated workers. Results of the study extend the empirical literature on labor supply in emerging markets and have practical implications for tax policy, indicating the possibility of increasing social welfare by increasing tax progressivity with little loss of economic efficiency.