Estimation of the Probability of Labor Force Participation of the AFDC Population-At-Risk
Abstract
The primary purpose of this paper is to apply maximum likelihood estimation (MLE) of nonlinear specifications of the probability of labor force participation (LFP) of female family heads with dependent children present, the Aid to Families with Dependent Children (AFDC) population- at-risk. Despite the fact that the method of MLE has been available for decades, MLE of highly non-linear specifications is not common. Although methods for the analysis of qualitative data have been discussed for many years, analysts continue to use inappropriate methods to estimate inappropriate functional specifications. One explanation is that computer software for MLE solution of highly non-linear functions is not trivial. A secondary purpose of this paper is to present a theoretical justification for the use of a sigmoid shaped function when estimating a probability like the labor force participation rate whether or not confronted with a dichotomous dependent variable. The sigmoid specification closely agrees with the shape expected for a labor force participation function and is logically consistent with a probability interpretation while the linear probability function is not.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jan 01, 1977
- Accession Number
- ADA593860
Entities
People
- Eric Solberg
- Gerald G. Brown
- Herbert Rutemiller
Organizations
- Naval Postgraduate School