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Labor Supply, Home Production and Welfare Comparisons

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  • Olivier Donni

Abstract

We consider the collective model of labor supply with marketable domestic production (Chiappori, 1997). We first show that, if domestic production is mistakenly ignored by the economist, welfare analyses will be probably distorted. Precisely, the identification of "collective" indirect utilities will be generally biased. The direction and the size of the bias depend on the complementarity/substituability of spouses' time inputs in the production process. The identification is unbiased if and only if the production function is additive. We then show that, even if domestic labor supplies are not observed by the economist, (i) market labor supplies have to satisfy testable restrictions, (ii) the structure of the model is partially identifiable so that valid welfare comparisons are still possible. Our identification results generalize Chiappori's (1992) ones.

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Bibliographic Info

Paper provided by CIRPEE in its series Cahiers de recherche with number 0427.

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Date of creation: 2004
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Handle: RePEc:lvl:lacicr:0427

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Keywords: Household; Collective Model; Labor Supply; Home Production; Welfare Analysis; Identification;

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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, 01.
  2. Jeremy Lise & Shannon Seitz, 2004. "Consumption Inequality and Intra-Household Allocations," Working Papers 1019, Queen's University, Department of Economics.
  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. Hélène Couprie, 2007. "Time allocation within the Family: Welfare implications of life in a couple," Economic Journal, Royal Economic Society, vol. 117(516), pages 287-305, 01.
  5. Rees, Ray, 1988. "Taxation and the Household," Munich Reprints in Economics 3411, University of Munich, Department of Economics.
  6. 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.
  7. Chiappori, Pierre-Andre, 1997. "Introducing Household Production in Collective Models of Labor Supply," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 191-209, February.
  8. Gronau, Reuben, 1977. "Leisure, Home Production, and Work-The Theory of the Allocation of Time Revisited," Journal of Political Economy, University of Chicago Press, vol. 85(6), pages 1099-1123, December.
  9. Olivier Donni & Nicolas Moreau, 2007. "Collective Labor Supply: A Single-Equation Model and Some Evidence from French Data," Journal of Human Resources, University of Wisconsin Press, vol. 42(1).
  10. Apps, P.F. & Rees, R., 1993. "Labour Supply, Household Production and Intra-Family Welfare Distribution," Working Papers 1993-3, University of Guelph, Department of Economics and Finance.
  11. Thomas Aronsson & Sven-Olov Daunfeldt & Magnus Wikström, 2001. "Estimating intrahousehold allocation in a collective model with household production," Journal of Population Economics, Springer, vol. 14(4), pages 569-584.
  12. Pierre-André Chiappori & Richard Blundell & Costas Meghir, 2002. "Collective labour supply with children," IFS Working Papers W02/08, Institute for Fiscal Studies.
  13. Graham, John W & Green, Carole A, 1984. "Estimating the Parameters of a Household Production Function with Joint Products," The Review of Economics and Statistics, MIT Press, vol. 66(2), pages 277-82, May.
  14. B. F. Kiker & M. Mendes de Oliveira, 1992. "Optimal Allocation of Time and Estimation of Market Wage Functions," Journal of Human Resources, University of Wisconsin Press, vol. 27(3), pages 445-471.
  15. Andrew Clark & Hélène Couprie & Catherine Sofer, 2004. "La modélisation collective de l'offre de travail. Mise en perspective et application aux données britanniques," Revue économique, Presses de Sciences-Po, vol. 55(4), pages 767-789.
  16. Apps, Patricia F & Rees, Ray, 1997. "Collective Labor Supply and Household Production," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 178-90, February.
  17. Olivier Donni, 2006. "Choix collectifs des heures travaillées, consommation publique et équilibre de Lindahl," THEMA Working Papers 2006-08, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  18. 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.
  19. Juster, F. Thomas & Stafford, Frank P., 1990. "The Allocation of Time: Empirical Findings, Behavioural Models, and Problems of Measurement," Working Paper Series 258, Research Institute of Industrial Economics.
  20. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
  21. Yuk-fai Fong & Junsen Zhang, 2001. "The Identification of Unobservable Independent and Spousal Leisure," Journal of Political Economy, University of Chicago Press, vol. 109(1), pages 191-202, February.
  22. Chiappori, P.A., 1989. "Collective Labour Supply and Welfare," DELTA Working Papers 89-07, DELTA (Ecole normale supérieure).
  23. Frederic Vermeulen, 2001. "And the winner is... An empirical evaluation of two competing approaches to household labour supply," Public Economics Working Paper Series ces0123, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
  24. Apps, Patricia F. & Rees, Ray, 1988. "Taxation and the household," Journal of Public Economics, Elsevier, vol. 35(3), pages 355-369, April.
  25. J. Taylor & Irma Adelman, 2003. "Agricultural Household Models: Genesis, Evolution, and Extensions," Review of Economics of the Household, Springer, vol. 1(1), pages 33-58, January.
  26. repec:rus:hseeco:101654 is not listed on IDEAS
  27. Eric J. Solberg & David C. Wong, 1992. "Family Time Use: Leisure, Home Production, Market Work, and Work Related Travel," Journal of Human Resources, University of Wisconsin Press, vol. 27(3), pages 485-510.
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