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And the winner is... An empirical evaluation of two competing approaches to household labour supply

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  • Frederic Vermeulen

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Abstract

In this paper, an empirical evaluation is presented of two competing flexible labour supply models. The first is a standard unitary model, while the second is based on the collective approach to household behaviour. The evaluation focuses on the testing of the models' theoretical implications, on their ability to identify structural information, like preferences and on their empirical performance. Models are estimated on Belgian microdata from 1992 and 1997. The unitary model cannot be rejected for single person households, while it is rejected for a sample of two person households. The alternative collective model cannot be rejected for the same sample. However, since the crucial assumption of egoistic or Beckerian caring individual preferences is rejected, the comparative advantage of the collective model as basis for intrahousehold welfare evaluations cannot be fully exploited. Finally, the collective model has the best empirical fit.

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File URL: http://www.econ.kuleuven.ac.be/ew/academic/econover/Papers/DPS0123.pdf
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Bibliographic Info

Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics in its series Public Economics Working Paper Series with number ces0123.

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Length: 36 pp.
Date of creation: 2001
Date of revision:
Handle: RePEc:wpe:papers:ces0123

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Related research

Keywords: collective household models; household bargaining; intrahousehold allocation; labour supply;

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References

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  1. Alderman, H. & Chiappori, P.A. & Haddad, L., 1994. "Unitary versus Collective Models of the Household: Time to Shift the Burden of Proof?," DELTA Working Papers 94-17, DELTA (Ecole normale supérieure).
  2. Chiappori, P.A., 1989. "Collective Labour Supply and Welfare," DELTA Working Papers 89-07, DELTA (Ecole normale supérieure).
  3. Frederic Vermeulen, 2006. "A collective model for female labour supply with non-participation and taxation," Journal of Population Economics, Springer, vol. 19(1), pages 99-118, February.
  4. Blundell, Richard William & Meghir, Costas, 1985. "Selection Criteria for a Microeconometric Model of Labour Supply," CEPR Discussion Papers 57, C.E.P.R. Discussion Papers.
  5. Apps, Patricia F & Rees, Ray, 1997. "Collective Labor Supply and Household Production," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 178-90, February.
  6. Dauphin, A. & Fortin, B., 2000. "A Test of Collective Rationality for Multi-Person Households," Papers 0005, Laval - Recherche en Politique Economique.
  7. Frederic VERMEULEN, 2000. "Collective Household Models: Principles and Main Results," Center for Economic Studies - Discussion papers ces0028, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  8. Alderman, Harold, et al, 1995. "Unitary versus Collective Models of the Household: Is It Time to Shift the Burden of Proof?," World Bank Research Observer, World Bank Group, vol. 10(1), pages 1-19, February.
  9. Lundberg, Shelly J, 1988. "Labor Supply of Husbands and Wives: A Simultaneous Equations Approach," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 224-35, May.
  10. Blundell, Richard & Walker, Ian, 1986. "A Life-Cycle Consistent Empirical Model of Family Labour Supply Using Cross-Section Data," Review of Economic Studies, Wiley Blackwell, vol. 53(4), pages 539-58, August.
  11. Blundell, Richard, 1988. "Consumer Behaviour: Theory and Empirical Evidence--a Survey," Economic Journal, Royal Economic Society, vol. 98(389), pages 16-65, March.
  12. Brett, Craig, 1998. "Tax reform and collective family decision-making," Journal of Public Economics, Elsevier, vol. 70(3), pages 425-440, December.
  13. Thomas, D., 1989. "Intra-Household Resource Allocation: An Inferential Approach," Papers 586, Yale - Economic Growth Center.
  14. Browning, M. & Bourguignon, F. & Chiappori, P.A. & Lechene, V., 1992. "Incomes and Outcomes: A structural Model of Intra-Household Allocation," DELTA Working Papers 92-23, DELTA (Ecole normale supérieure).
  15. Pierre-Andre Chiappori & Bernard Fortin & Guy Lacroix, 2002. "Marriage Market, Divorce Legislation, and Household Labor Supply," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 37-72, February.
  16. 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.
  17. Richard Blundell & Pierre-Andr� Chiappori & Costas Meghir, 2005. "Collective Labor Supply with Children," Journal of Political Economy, University of Chicago Press, vol. 113(6), pages 1277-1306, December.
  18. Apps, Patricia F. & Rees, Ray, 1988. "Taxation and the household," Journal of Public Economics, Elsevier, vol. 35(3), pages 355-369, April.
  19. Chiappori, P.A., 1994. "Introducing Household Production in Collective Models of Labour Suply," DELTA Working Papers 94-18, DELTA (Ecole normale supérieure).
  20. Pollak, Robert A, 1977. "Price Dependent Preferences," American Economic Review, American Economic Association, vol. 67(2), pages 64-75, March.
  21. Arthur Lewbel, 2001. "Demand Systems with and without Errors," American Economic Review, American Economic Association, vol. 91(3), pages 611-618, June.
  22. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
  23. 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.
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Citations

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Cited by:
  1. Donni, Olivier, 2005. "Labor Supply, Home Production and Welfare Comparisons," IZA Discussion Papers 1511, Institute for the Study of Labor (IZA).
  2. Pierre-André Chiappori & Olivier Donni, 2004. "Les modèles non-unitaires de comportement du ménage: un survol de la littérature," Cahiers de recherche 0426, CIRPEE.
  3. 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 0007, Dipartimento di Scienze Economiche e Metodi Matematici - Università di Bari, revised Jan 2002.
  4. Olivier Donni & Nicolas Moreau, 2005. "Collective Labor Supply: a Single-Equation Model and Some Evidence from French Data," Cahiers de recherche 0516, CIRPEE.
  5. Chiappori, Pierre-André & Donni, Olivier, 2009. "Non-unitary Models of Household Behavior: A Survey of the Literature," IZA Discussion Papers 4603, Institute for the Study of Labor (IZA).

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