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A Collective Labor Supply Model: Identification and Estimation in the Presence of Externalities by Means of Panel Data

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Author Info
Pierre-Carl Michaud
Frederic Vermeulen

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Abstract

The authors study labor supply of elderly couples by means of a collective model. The model allows individuals to enjoy leisure more (or less) in company of their spouse (complementarity/ externalities in leisure). Preferences and the intra-household bargaining process are identified by using panel data through the dissolution of the household due to the death of one of the partners. The model does not only look at the extensive margin (working versus being retired), but also at the intensive margin (how many hours are worked). They apply the model to American households coming from the first six waves of the Health and Retirement Study. They compare model simulations with those from a standard unitary model for a set of policy reforms; such as the widely discussed proposals to eliminate the earnings test and the replacement of the spouse benefit with a past earnings sharing mechanism.

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Publisher Info
Paper provided by RAND Corporation Publications Department in its series Working Papers with number 406.

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Length: 34 pages
Date of creation: Jul 2006
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Handle: RePEc:ran:wpaper:406

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Related research
Keywords: collective model; intra-household allocation; labor supply; retirement; social security; identification;

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Find related papers by JEL classification:
D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
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
J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

References listed on IDEAS
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. Michael Hurd & James P. Smith & Julie M. Zissimopoulos, 2003. "The Effects of Subjective Survival on Retirements and Social Security Claiming," Working Papers 03-11, RAND Corporation Publications Department. [Downloadable!]
    Other versions:
  2. Alison L. Booth & Jan C. Van Ours, 2009. "Hours of Work and Gender Identity: Does Part-time Work Make the Family Happier?," Economica, London School of Economics and Political Science, vol. 76(301), pages 176-196, 02. [Downloadable!] (restricted)
    Other versions:
  3. Olivier Bargain & Miriam Beblo & Denis Beninger & Richard Blundell & Raquel Carrasco & Maria-Concetta Chiuri & François Laisney & Valérie Lechene & Nicolas Moreau & Michal Myck & Javier Ruiz-Castill, 2006. "Does the Representation of Household Behavior Matter for Welfare Analysis of Tax-benefit Policies? An Introduction," Review of Economics of the Household, Springer, vol. 4(2), pages 99-111, 06. [Downloadable!] (restricted)
  4. Kwang-Yeol Yoo & Alain de Serres, 2004. "Tax Treatment of Private Pension Savings in OECD Countries and the Net Tax Cost Per Unit of Contribution to Tax-Favoured Schemes," OECD Economics Department Working Papers 406, OECD, Economics Department. [Downloadable!]
  5. Frederic Vermeulen & Olivier Bargain & Miriam Beblo & Denis Beninger & Richard Blundell & Raquel Carrasco & Maria-Concetta Chiuri & François Laisney & Valérie Lechene & Nicolas Moreau & Michal Myck , 2006. "Collective Models of Labor Supply with Nonconvex Budget Sets and Nonparticipation: A Calibration Approach," Review of Economics of the Household, Springer, vol. 4(2), pages 113-127, 06. [Downloadable!] (restricted)
  6. 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)
  7. Frederic Vermeulen, 2002. "A collective model for female labour supply with nonparticipation and taxation," Public Economics Working Paper Series ces0214, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics. [Downloadable!]
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  8. Haider, S. & Solon, G., 2000. "Nonrandom Selection in the HRS Social Security Earnings Sample," Papers 00-01, RAND - Labor and Population Program.
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  9. Jonathan Gruber & Peter Orszag, 2000. "Does the Social Security Earnings Test Affect Labor Supply and Benefits Receipt?," NBER Working Papers 7923, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Maurizio Mazzocco, 2007. "Household Intertemporal Behaviour: A Collective Characterization and a Test of Commitment," Review of Economic Studies, Blackwell Publishing, vol. 74(3), pages 857-895, 07. [Downloadable!] (restricted)
  11. Richard Blundell ; Pierre-André Chiappori ; Thierry Magnac ; Costas Meghir, 2001. "Collective Labor Supply : Heterogeneity and Nonparticipation," Working Papers 2001-32, Centre de Recherche en Economie et Statistique. [Downloadable!]
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  12. Michaud, P.C. & Soest, A.H.O. van, 2004. "Health and wealth of elderly couples : causality tests using dynamic panel data," Discussion Paper 81, Tilburg University, Center for Economic Research. [Downloadable!]
  13. Pierre-André Chiappori & Bernard Fortin & Guy Lacroix, 2001. "Marriage Market, Divorce Legislation and Household Labor Supply," CIRANO Working Papers 2001s-16, CIRANO. [Downloadable!]
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  14. 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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Cited by:
(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. Guy Lacroix & Natalia Radtchenko, 2008. "The Changing Intra-Household Resource Allocation in Russia," Cahiers de recherche 0811, CIRPEE. [Downloadable!]
    Other versions:
  2. Laurens Cherchye & Bram De Rock & Frederic Vermeulen, 2008. "The Revealed Preference Approach to Collective Consumption Behavior: Testing, Recovery and Welfare Analysis," ECARES Working Papers 2008_029, Université Libre de Bruxelles, Ecares. [Downloadable!]
    Other versions:
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