Research & Analysis by Jesse M. Levy
Estimation of Disability Status as a Single Latent Variable in a Model with Multiple Indicators and Multiple Causes
In this paper, we are concerned with the underlying structure of self-definitions of disability. Our purpose is to identify the contribution of exertional and nonexertional impairment and the contributions of such nonmedical factors as age, sex, and education to the individuals' assessment of their own situations. On a statistical level, we seek to accomplish a substantial reduction of a large number of data items into a form that can be used conveniently in subsequent behavioral analyses.
The role of time as an input into the utility maximization process has long been recognized in the labor/leisure decision. Expanded research has dealt with this input in a family context. Assuming a joint utility maximization model, the resulting labor supply functions can be determined for both spouses.
The model presented here is an extension of previous models by its incorporation of the effects of disabling conditions of the husband on the labor supply decisions of both spouses.
Because hours worked takes on a lower limit of zero, the standard simultaneous equation techniques would yield estimates lacking the ideal properties. Instead, the model is estimated using a simplification of a simultaneous TOBIT technique, which yields consistent estimates.