This paper investigates whether one’s effort to keep up with the Joneses has any effect on labor supply behavior. We provide a simple model and empirical evidence that labor supply decisions of married women are influenced by relative as well as absolute income of their husbands. We find, after controlling for husbands’ absolute income and other individual characteristics, that married women are more likely to be in labor force when their husbands’ relative income is low. Results are robust across various settings and measures of relative income and the size of the effect is economically meaningful. We also show that income inequality of reference group of husbands in age-regional cross sections can be a predictor of their wives’ labor supply.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by University of Massachusetts Amherst, Department of Economics in its series Working Papers with number
2005-10.
Find related papers by JEL classification: H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution D62 - Microeconomics - - Welfare Economics - - - Externalities J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
This paper has been announced in the following NEP Reports: