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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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  • Laurens Cherchye

    (University of Leuven Campus Kortrijk and Center for Economic Studies)

  • Frederic Vermeulen

    (Tilburg University, CentER, Netspar, and IZA)

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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Bibliographic Info

Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 90 (2008)
Issue (Month): 2 (May)
Pages: 267-274

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Handle: RePEc:tpr:restat:v:90:y:2008:i:2:p:267-274

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  1. Fortin, Bernard & Lacroix, Guy, 1997. "A Test of the Unitary and Collective Models of Household Labour Supply," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 107(443), pages 933-55, July.
  2. Chiappori, Pierre-André & Fortin, Bernard & Lacroix, Guy, 2001. "Marriage Market, Divorce Legislation and Household Labor Supply," Cahiers de recherche, Université Laval - Département d'économique 0103, Université Laval - Département d'économique.
  3. Laurens Cherchye & Bram De Rock & Frederic Vermeulen, 2007. "The Collective Model of Household Consumption: A nonparametric characterization," ULB Institutional Repository, ULB -- Universite Libre de Bruxelles 2013/98559, ULB -- Universite Libre de Bruxelles.
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  12. Varian, H.R., 1991. "Goodness of Fit for Revealed Preference Tests," Papers, Michigan - Center for Research on Economic & Social Theory 13, Michigan - Center for Research on Economic & Social Theory.
  13. Vermeulen, F.M.P., 2005. "And the winner is..... An empirical evaluation of unitary and collective labour supply models," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-194165, Tilburg University.
  14. Theodore W. Schultz, 1962. "Reflections on Investment in Man," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 70, pages 1.
  15. 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, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(2), pages 460-72, June.
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