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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
Cherchye, Laurens
Vermeulen, Frederic (Tilburg University, Center for Economic Research)

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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 speci.ed functional form for the prefer-ences and/or the intrahousehold bargaining process. Our analysis focuses on the goodness-of-.t of the two behavioral models. To guarantee a fair comparison, we complement this goodness-of-.t analysis with a power analysis. Our results strongly favor the collective approach to modeling the behavior of multi-person households

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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 13.

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Date of creation: 2006
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Handle: RePEc:dgr:kubcen:200613

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Find related papers by JEL classification:
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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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. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, vol. 50(4), pages 945-73, July. [Downloadable!] (restricted)
  3. Cox, James C, 1997. "On Testing the Utility Hypothesis," Economic Journal, Royal Economic Society, vol. 107(443), pages 1054-78, July. [Downloadable!] (restricted)
  4. 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)
  5. Susan K. Snyder, 2000. "Nonparametric Testable Restrictions of Household Behavior," Southern Economic Journal, Southern Economic Association, vol. 67(1), pages 171-185, July.
  6. Martin Browning & P.A. Chiappori, 1996. "Efficient Intra-Household Allocations - A General Characterization and Empirical Tests," Discussion Papers 96-10, University of Copenhagen. Department of Economics.
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  7. 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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  8. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January. [Downloadable!] (restricted)
  9. Browning, M. & Bourguignon, F. & Chiappori, P.A. & Lechene, V., 1992. "Incomes and Outcomes: A structural Model of Intra-Household Allocation," DELTA Working Papers 92-23, DELTA (Ecole normale supérieure).
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  10. 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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  11. Theodore W. Schultz, 1962. "Reflections on Investment in Man," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1. [Downloadable!] (restricted)
  12. Varian, Hal R., 1990. "Goodness-of-fit in optimizing models," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 125-140. [Downloadable!] (restricted)
  13. 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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  14. 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)
  15. 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)
  16. Hal R. Varian, 1994. "Goodness-of-Fit for Revealed Preference Tests," Econometrics 9401001, EconWPA. [Downloadable!]
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  17. 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)
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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!]
    Other versions:
  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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