The Impact of Regional and Sectoral Labor Market Conditions on Wages and Labor Supply--An Empirical Analysis for Married Women Using West-German Panel Data
In this paper we examine the effects of regional and industry specific labor market indicators on wages and labor supply of married females. Based on the standard life-cycle labor supply theory we derive a two equation censored panel model and estimate it using the Minimum Distance Method. For our empirical analysis we use four waves (1984-1987) of West German Panel data merged with regional indicators and industry specific demand side indicators. We obtain the result that, unlike industry specific indicators, regional demand side conditions have virtually no significant effect on market wages but that a direct effect of regional labor market conditions on labour supply remains. We conclude that regional labor market conditions can directly constrain the individual labor supply decision.
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