We examine the importance of possible non-random attrition to an econometric model of life cycle labor supply including joint nonlinear taxation of wage and interest incomes and latent heterogeneity. We use a Wald test comparing attriters to nonattriters and variable addition testing based on formal models of attrition. Results from the Panel Study of Income Dynamics are that non-random panel attrition is of little concern for prime-aged male labor supply estimation because the effect of attrition is absorbed into the fixed effects. Attrition is less econometrically influential than research design decisions typically taken for granted; the wage measure or instrument set has a much greater impact on the estimated labor supply function of prime-aged men than how one includes panel attrition.
Kniesner, Thomas J. and Ziliak, James P., "The Importance of Sample Attrition in Life Cycle Labor Supply Estimation" (1996). Economics Faculty Scholarship. 121.
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