Estimating and testing preferences for consumption, work hours and savings using the PSID, the profit function and the true dynamic budget constraint
AbstractFive waves of the Panel Study of Income Dynamics (PSID), 1985-1989 including both wealth supplements, are used to construct an intertemporal budget constraint for selected single headed households. A new functional form of the dual consumer profit function rationalizing consumption, labor supply and savings is specified, estimated and used to test commonly maintained separability hypotheses. Both consumption- labor and time separability are rejected. Cross-price Frisch elasticities are found not to equal zero and this in turns affects all estimates of consumption, labor supply and saving elasticities.
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Bibliographic InfoPaper provided by EconWPA in its series Microeconomics with number 0312005.
Length: 46 pages
Date of creation: 16 Dec 2003
Date of revision:
Note: Type of Document - word doc; prepared on Windows 2000; pages: 46; figures: 5. Word 2002 document
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intertemporal; consumption; labor; labour; wealth; savings; PSID; Panel Study of Income Dynamics; consumer profit function;
Find related papers by JEL classification:
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- 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:
- NEP-ALL-2004-01-12 (All new papers)
- NEP-DGE-2004-01-12 (Dynamic General Equilibrium)
- NEP-MIC-2004-01-12 (Microeconomics)
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