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Collective Household Labor Supply: Nonparticipation and Income Taxation

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Abstract

In this paper, we adopt the usual assumptions of the collective approach, i.e. individualism and efficiency, to study household labor supply. The theoretical innovation is twofold. First, we incorporate the decision to participate in the labor market in the initial setting. Second, we abandon the assumption of linearity of the budget constraint. We show that (i) structural elements such as preferences or the outcome of the decision process can be recovered, and (ii) testable restrictions are generated from the observation of the household labor supplies. We also examine, for this model, how to simulate the incidence of fiscal reforms. Dans cet article, nous adoptons les hypothèses habituelles de l'approche collective, à savoir, l'individualisme et l'efficacité, pour étudier l'offre de travail du ménage. L'innovation théorique est double. D'une part, nous incorporons dans le cadre initial la décision de participer au marché du travail. D'autre part, nous abandonnons l'hypothèse de linéarité de la contrainte budgetaire. Nous montrons alors que (i) des éléments structurels du processus de décision peuvent être retrouvés, et (ii) des restrictions testables sont générées de l'observation des offres de travail du ménage. Nous examinons également, pour ce modèle, comment faire des simulations de réformes fiscales.

Suggested Citation

  • 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.
  • Handle: RePEc:cre:crefwp:140
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    References listed on IDEAS

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    1. Olivier Donni, 2007. "Collective female labour supply: theory and application," Economic Journal, Royal Economic Society, vol. 117(516), pages 94-119, January.
    2. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
    3. Richard Blundell & Pierre-Andre Chiappori & Thierry Magnac & Costas Meghir, 2007. "Collective Labour Supply: Heterogeneity and Non-Participation," Review of Economic Studies, Oxford University Press, vol. 74(2), pages 417-445.
    4. Brett, Craig, 1998. "Tax reform and collective family decision-making," Journal of Public Economics, Elsevier, vol. 70(3), pages 425-440, December.
    5. 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.
    6. 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 933-955, July.
    7. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-467, June.
    8. Apps, Patricia F. & Rees, Ray, 1988. "Taxation and the household," Journal of Public Economics, Elsevier, vol. 35(3), pages 355-369, April.
    9. McElroy, Marjorie B & Horney, Mary Jean, 1981. "Nash-Bargained Household Decisions: Toward a Generalization of the Theory of Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 333-349, June.
    10. Shelly Lundberg & Robert A. Pollak, 1996. "Bargaining and Distribution in Marriage," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 139-158, Fall.
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    More about this item

    Keywords

    Collective Models; Labor Supply; Income Tax; Corner Solutions;
    All these keywords.

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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