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Collective models of labor supply with nonconvex budget sets and nonparticipation: A calibration approach

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Author Info

  • Vermeulen, F.M.P.

    (Tilburg University)

  • Bargain, O.
  • Beblo, M.
  • Beninger, D.
  • Blundell, R.
  • Carrasco, R.
  • Chiuri, M-C.
  • Laisney, F.
  • Lechene, V.
  • Moreau, N.
  • Myck, M.
  • Ruiz-castillo, J.

Abstract

We suggest a methodology to calibrate a collective model with household-specific bargaining rules and marriage-specific preferences that incorporate leisure externalities. The empirical identification relies on the assumption that some aspects of individual preferences remain the same after marriage, so that estimation on single individuals can be used. The procedure maps the complete Pareto frontier of each household in the dataset and we define alternative measures of a power index. The latter is then regressed on relevant bargaining factors, including a set of variables retracing the potential relative contributions of the spouses to household disposable income. In its capacity to handle complex budget sets and labor force participation decisions of both spouses, this framework allows the comparison of unitary and collective predictions of labor supply reactions and welfare changes entailed by fiscal reforms in a realistic setting (see Michal Myck et al., 2006 ; Denis Beninger et al., 2006 ). Copyright Springer Science+Business Media, LLC 2006

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Paper provided by Tilburg University in its series Open Access publications from Tilburg University with number urn:nbn:nl:ui:12-194160.

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Date of creation: 2006
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Publication status: Published in Review of Economics of the Household (2006) v.4, p.113-127
Handle: RePEc:ner:tilbur:urn:nbn:nl:ui:12-194160

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Web page: http://www.tilburguniversity.edu/

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  1. Richard Blundell & Alan Duncan & Costas Meghir, 1998. "Estimating Labor Supply Responses Using Tax Reforms," Econometrica, Econometric Society, Econometric Society, vol. 66(4), pages 827-862, July.
  2. Yuk-fai Fong & Junsen Zhang, 2001. "The Identification of Unobservable Independent and Spousal Leisure," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 109(1), pages 191-202, February.
  3. Apps, Patricia & Rees, Ray, 2000. "Household Production, Full Consumption and the Costs of Children," IZA Discussion Papers 157, Institute for the Study of Labor (IZA).
  4. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 100(3), pages 437-67, June.
  5. Laisney, François & Beninger, Denis & Beblo, Miriam, 2003. "Welfare Analysis of Fiscal Reforms: Does the Representation of the Family Decision Process Matter? Evidence for Germany," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 03-31, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. Keshab Bhattarai & John Whalley, 2003. "Discreteness and the Welfare Cost of Labor Supply Tax Distortions," 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. 44(3), pages 1117-1133, 08.
  7. Donni, Olivier, 2003. "Collective household labor supply: nonparticipation and income taxation," Journal of Public Economics, Elsevier, Elsevier, vol. 87(5-6), pages 1179-1198, May.
  8. Denis Beninger & Olivier Bargain & Miriam Beblo & Richard Blundell & Raquel Carrasco & Maria-Concetta Chiuri & François Laisney & Valérie Lechene & Ernesto Longobardi & Nicolas Moreau & Michal Myck , 2006. "Evaluating the Move to a Linear Tax System in Germany and Other European Countries," Review of Economics of the Household, Springer, Springer, vol. 4(2), pages 159-180, 06.
  9. Apps, Patricia, 2003. "Gender, Time Use and Models of the Household," IZA Discussion Papers 796, Institute for the Study of Labor (IZA).
  10. Hoynes, Hilary Williamson, 1996. "Welfare Transfers in Two-Parent Families: Labor Supply and Welfare Participation under AFDC-UP," Econometrica, Econometric Society, Econometric Society, vol. 64(2), pages 295-332, March.
  11. Anyck Dauphin & Abdel-Rahmen El Lahga & Bernard Fortin & Guy Lacroix, 2004. "Choix de consommation des ménages en présence de plusieurs décideurs," Cahiers de recherche, CIRPEE 0433, CIRPEE.
  12. Martin Browning & Valérie Lechene, 2001. "Caring and Sharing: Tests Between Alternative Models of Intra-household Allocation," Discussion Papers 01-07, University of Copenhagen. Department of Economics.
  13. Small, Kenneth A & Rosen, Harvey S, 1981. "Applied Welfare Economics with Discrete Choice Models," Econometrica, Econometric Society, Econometric Society, vol. 49(1), pages 105-30, January.
  14. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, Econometric Society, vol. 56(1), pages 63-90, January.
  15. Martin Browning & Pierre-Andre Chiappori, 2006. "Estimating Consumption Economies of Scale, Adult Equivalence Scales, and Household Bargaining Power," Economics Series Working Papers, University of Oxford, Department of Economics 289, University of Oxford, Department of Economics.
  16. Frederic Vermeulen, 2005. "And the winner is... An empirical evaluation of unitary and collective labour supply models," Empirical Economics, Springer, Springer, vol. 30(3), pages 711-734, October.
  17. Arthur van Soest, 1995. "Structural Models of Family Labor Supply: A Discrete Choice Approach," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 63-88.
  18. Valerie Lechene & Martin Browning, 2004. "Collective and unitary models: a clarification," Economics Series Working Papers, University of Oxford, Department of Economics 191, University of Oxford, Department of Economics.
  19. Apps, Patricia F. & Rees, Ray, 1988. "Taxation and the household," Journal of Public Economics, Elsevier, Elsevier, vol. 35(3), pages 355-369, April.
  20. Pierre-Andre Chiappori & Bernard Fortin & Guy Lacroix, 2002. "Marriage Market, Divorce Legislation, and Household Labor Supply," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 110(1), pages 37-72, February.
  21. Fortin, B. & Lacroix, G., 1993. "A Test of the Neoclassical and Collective Models of Household Labour Supply," Papers, Laval - Recherche en Politique Economique 9335, Laval - Recherche en Politique Economique.
  22. Maria Concetta Chiuri & Ernesto Longobardi, 2002. "Welfare analysis of fiscal reforms in Europe: Does the representation of family decision processes matter? Evidence from Italy," series, Dipartimento di Scienze Economiche e Metodi Matematici - Università di Bari 0007, Dipartimento di Scienze Economiche e Metodi Matematici - Università di Bari, revised Jan 2002.
  23. Blundell, Richard & Chiappori, Pierre-André & Magnac, Thierry & Meghir, Costas, 2005. "Collective Labour Supply: Heterogeneity and Nonparticipation," IDEI Working Papers, Institut d'Économie Industrielle (IDEI), Toulouse 373, Institut d'Économie Industrielle (IDEI), Toulouse.
  24. Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "The labour market impact of the working families’ tax credit," Fiscal Studies, Institute for Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 75-103, March.
  25. Rees, Ray, 1988. "Taxation and the Household," Munich Reprints in Economics, University of Munich, Department of Economics 3411, University of Munich, Department of Economics.
  26. Martin Browning & Pierre-Andre Chiappori, 1994. "Efficient Intra-Household Allocations: a General Characterization and Empirical Tests," Department of Economics Working Papers 1994-02, McMaster University.
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  28. repec:bla:restud:v:74:y:2007:i:2:p:417-445 is not listed on IDEAS
  29. Manser, Marilyn & Brown, Murray, 1980. "Marriage and Household Decision-Making: A Bargaining Analysis," 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. 21(1), pages 31-44, February.
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