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Recreation, home production and intertemporal substitution of female labor supply: evidence on the intensive margin

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  • Jorge González-Chapela

    ()
    (Universidad de Alicante)

Abstract

The predicted labor supply responses to variations in wages and prices are important for discussions of the economic efficiency of taxes and subsidies, and their extent may be also relevant to the analysis of economic fluctuations. This paper presents new estimates of the wage intertemporal substitution elasticity (ISE) for the intensive margin of female labor supply, and explores this margin’s sensitivity to price changes of goods consumed in recreation and home production activities. Our estimated wage ISE, .9, implies that, at average values for the allocation of time, female labor force participants will increase annual labor supply by some 14 hours when faced with a 1% grow in the wage rate. Of this increase, approximately 7 hours will come from less leisure and the other 7 from less home production. Keeping constant the price of home consumption goods, the intensive margin of female labor supply is unaffected by variations in recreation goods prices. We also estimate an elasticity of substitution between time and goods in home production of approximately 2.

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Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2011-04.

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Length: 1 pages
Date of creation: Feb 2011
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Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2011-04

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Keywords: female labor supply; intertemporal substitution; system GMM estimation;

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