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Nonparametric Analysis of Household Labor Supply: Goodness of Fit and Power of the Unitary and the Collective Model

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Author Info
Laurens Cherchye (University of Leuven Campus Kortrijk and Center for Economic Studies)
Frederic Vermeulen (Tilburg University, CentER, Netspar, and IZA)

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Abstract

We compare the empirical performance of unitary and collective labor supply models, using representative data from the Dutch DNB Household Survey. We conduct a nonparametric analysis that avoids the distortive impact of an erroneously specified functional form for the preferences and/or the intrahousehold bargaining process. Our analysis focuses on the goodness of fit of the two behavioral models. To guarantee a fair comparison, we complement this goodness-of-fit analysis with a power analysis. Our results strongly favor the collective approach to modeling the behavior of multiperson households. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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File URL: http://www.mitpressjournals.org/doi/pdfplus/10.1162/rest.90.2.267
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Publisher Info
Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 90 (2008)
Issue (Month): 2 (03)
Pages: 267-274
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Handle: RePEc:tpr:restat:v:90:y:2008:i:2:p:267-274

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-67, June. [Downloadable!] (restricted)
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  2. Cherchye, L. & Rock, B. de & Vermeulen, F.M.P., 2004. "The collective model of household consumption : a nonparametric characterization," Discussion Paper 76, Tilburg University, Center for Economic Research. [Downloadable!]
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  3. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, vol. 50(4), pages 945-73, July. [Downloadable!] (restricted)
  4. Cox, James C, 1997. "On Testing the Utility Hypothesis," Economic Journal, Royal Economic Society, vol. 107(443), pages 1054-78, July. [Downloadable!] (restricted)
  5. Theodore W. Schultz, 1962. "Reflections on Investment in Man," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1. [Downloadable!] (restricted)
  6. Varian, Hal R., 1990. "Goodness-of-fit in optimizing models," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 125-140. [Downloadable!] (restricted)
  7. Frederic Vermeulen, 2005. "And the winner is... An empirical evaluation of unitary and collective labour supply models," Empirical Economics, Springer, vol. 30(3), pages 711-734, October. [Downloadable!] (restricted)
  8. Browning, Martin & Francois Bourguignon & Pierre-Andre Chiappori & Valerie Lechene, 1994. "Income and Outcomes: A Structural Model of Intrahousehold Allocation," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1067-96, December. [Downloadable!] (restricted)
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  9. Pierre-Andre Chiappori & Bernard Fortin & Guy Lacroix, 2002. "Marriage Market, Divorce Legislation, and Household Labor Supply," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 37-72, February. [Downloadable!] (restricted)
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  10. M. Browning & P. A. Chiappori, 1998. "Efficient Intra-Household Allocations: A General Characterization and Empirical Tests," Econometrica, Econometric Society, vol. 66(6), pages 1241-1278, November.
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  11. Susan K. Snyder, 2000. "Nonparametric Testable Restrictions of Household Behavior," Southern Economic Journal, Southern Economic Association, vol. 67(1), pages 171-185, July.
  12. Afriat, S N, 1973. "On a System of Inequalities in Demand Analysis: An Extension of the Classical Method," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(2), pages 460-72, June. [Downloadable!] (restricted)
  13. Famulari, Melissa, 1995. "A Household-Based, Nonparametric Test of Demand Theory," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 372-82, May. [Downloadable!] (restricted)
  14. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier. [Downloadable!] (restricted)
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  15. Hal R. Varian, 1994. "Goodness-of-Fit for Revealed Preference Tests," Econometrics 9401001, EconWPA. [Downloadable!]
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  16. Fortin, Bernard & Lacroix, Guy, 1997. "A Test of the Unitary and Collective Models of Household Labour Supply," Economic Journal, Royal Economic Society, vol. 107(443), pages 933-55, July. [Downloadable!] (restricted)
  17. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Cherchye, L. & Rock, B. de & Vermeulen, F.M.P., 2004. "The collective model of household consumption : a nonparametric characterization," Discussion Paper 76, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  2. Laurens Cherchye & Bram De Rock & Frederic Vermeulen, 2005. "Opening the Black Box of Intra-Household Decision-Making: Theory and Non-Parametric Empirical Tests of General Collective Consumption Models," IZA Discussion Papers 1603, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. Michaud, P.C. & Vermeulen, F.M.P., 2004. "A collective retirement model : identification and estimation in the presence of externalities," Discussion Paper 75, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  4. Cherchye, L. & Rock, B. de & Vermeulen, F.M.P., 2008. "Economic Well-Being and Poverty Among the Elderly: An Analysis Based on a Collective Consumption Model," Discussion Paper 2008-15, Tilburg University, Center for Economic Research. [Downloadable!]
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  5. Boone, Jan & van der Wiel, Karen & Vermeulen, Frederic, 2009. "Kinky Choices, Dictators and Split Might: A Non-Cooperative Model for Household Consumption and Labor Supply," IZA Discussion Papers 4272, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  6. Laurens Cherchye & Bram De Rock & Jeroen Sabbe & Frederic Vermeulen, 2008. "Nonparametric Tests of Collectively Rational Consumption Behavior: an Integer Programming Procedure," ECARES Working Papers 2008_001, Université Libre de Bruxelles, Ecares. [Downloadable!]
    Other versions:
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