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A collective labor supply model with complementarities in leisure: Identification and estimation by means of panel data

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  • Michaud, Pierre-Carl
  • Vermeulen, Frederic

Abstract

We present a novel identification strategy for a collective labor supply model that allows for complementarities in leisure (i.e., individuals may enjoy leisure more in company of their spouse). Individual preferences and the Pareto weights (which capture the intra-household bargaining process) are identified by making use of panel data with couples and individuals who became a widow(er) in the observation period, along with the assumption that an individual's preferences can only change in a particular manner after the spouse's death. The change in preferences comes from changes in observable variables that can be controlled for (like mental health) and from the loss of the possibility to jointly enjoy leisure after the couple's dissolution. We apply the model to American households coming from the first nine waves of the Health and Retirement Study (1992-2008) and show that complementarities in leisure are indeed important when modeling spouses' labor supply choices.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 18 (2011)
Issue (Month): 2 (April)
Pages: 159-167

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Handle: RePEc:eee:labeco:v:18:y:2011:i:2:p:159-167

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Web page: http://www.elsevier.com/locate/labeco

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Keywords: Collective model Intra-household allocation Labor supply Retirement Social security Identification;

References

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  1. Richard Blundell & Thomas MaCurdy, 1998. "Labour supply: a review of alternative approaches," IFS Working Papers W98/18, Institute for Fiscal Studies.
  2. Richard Blundell & Pierre-Andr� Chiappori & Costas Meghir, 2005. "Collective Labor Supply with Children," Journal of Political Economy, University of Chicago Press, vol. 113(6), pages 1277-1306, December.
  3. Laurens Cherchye & Bram De Rock & Frederic Vermeulen, 2009. "Opening the black box of intrahousehold decision making: theory and nonparametric empirical tests of general collective consumption models," ULB Institutional Repository 2013/98561, ULB -- Universite Libre de Bruxelles.
  4. Martin Browning & Pierre-Andre Chiappori, 1994. "Efficient Intra-Household Allocations: a General Characterization and Empirical Tests," Department of Economics Working Papers 1994-02, McMaster University.
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  15. Cherchye, Laurens & Vermeulen, Frederic, 2006. "Nonparametric Analysis of Household Labor Supply: Goodness-of-Fit and Power of the Unitary and the Collective Model," IZA Discussion Papers 2004, Institute for the Study of Labor (IZA).
  16. Olivier Donni, 2001. "Collective Household Labor Supply: Nonparticipation and Income Taxation," Cahiers de recherche CREFE / CREFE Working Papers 140, CREFE, Université du Québec à Montréal.
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Citations

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Cited by:
  1. André De Palma & Nathalie Picard & Ignacio Inoa, 2014. "Discrete Choice Decision-Making with Multiple Decision Makers within the Household," Working Papers hal-00969216, HAL.
  2. Pierre Lefebvre & Philip Merrigan & Pierre-Carl Michaud, 2011. "The Recent Evolution of Retirement Patterns in Canada," Social and Economic Dimensions of an Aging Population Research Papers 287, McMaster University.
  3. Noelia BERNAL & Frederic VERMEULEN, 2013. "The impact of an increase in the legal retirement age on the effective retirement age," Center for Economic Studies - Discussion papers ces13.03, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  4. Laurens Cherchye & Bram De Rock & Frederic Vermeulen, 2012. "Economic well-being and poverty among the elderly: an analysis based on a collective consumption model," ULB Institutional Repository 2013/131702, ULB -- Universite Libre de Bruxelles.
  5. Li, Jinjing & O'Donoghue, Cathal, 2011. "Retirement Choice Simulation in Household Settings with Heterogeneous Pension Plans," IZA Discussion Papers 5866, Institute for the Study of Labor (IZA).

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