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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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  • Pierre-Carl Michaud
  • Frederic Vermeulen

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.

Suggested Citation

  • Pierre-Carl Michaud & Frederic Vermeulen, 2006. "A Collective Labor Supply Model Identification and Estimation in the Presence of Externalities By Means of Panel Data," Working Papers WR-406, RAND Corporation.
    • Handle: RePEc:ran:wpaper:wr-406
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    References listed on IDEAS

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    1. Michaud, Pierre-Carl & van Soest, Arthur, 2008. "Health and wealth of elderly couples: Causality tests using dynamic panel data models," Journal of Health Economics, Elsevier, vol. 27(5), pages 1312-1325, September.
    2. Richard Blundell & Pierre-Andre Chiappori & Thierry Magnac & Costas Meghir, 2007. "Collective Labour Supply: Heterogeneity and Non-Participation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(2), pages 417-445.
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    7. 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, June.
    8. Frederic Vermeulen, 2006. "A collective model for female labour supply with non-participation and taxation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(1), pages 99-118, February.
    9. Cordelia Reimers & Marjorie Honig, 1996. "Responses to Social Security by Men and Women: Myopic and Far-Sighted Behavior," Journal of Human Resources, University of Wisconsin Press, vol. 31(2), pages 359-382.
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    13. 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.
    14. Olivier Bargain & Miriam Beblo & Denis Beninger & Richard Blundell & Raquel Carrasco & Marie-Concetta Chiuri & Francois Laisney & Valérie Lechene & Nicolas Moreau & Michal Myck & Javier Ruiz-Castillo , 2006. "Does the representation of the household behavior matter for welfare analysis of tax-benefit policies ?," Post-Print hal-00279212, HAL.
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    Cited by:

    1. Natalia Radtchenko, 2009. "Identifying Intra-household Welfare Distribution," Documents de recherche 09-04, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    2. Ekaterina Kalugina & Catherine Sofer & Natalia Radtchenko, 2009. "Intra-household inequality in transitional Russia," Review of Economics of the Household, Springer, vol. 7(4), pages 447-471, December.
    3. Guy Lacroix & Natalia Radtchenko, 2011. "The changing intra-household resource allocation in Russia," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(1), pages 85-106, January.

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    More about this item

    Keywords

    collective model; intra-household allocation; labor supply; retirement; social security; identification;
    All these keywords.

    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

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