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A collective labor supply model with complementarities in leisure: Identification and estimation by means of panel data

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  • Michaud, Pierre-Carl
  • Vermeulen, Frederic

Abstract

We present a novel identification strategy for a collective labor supply model that allows for complementarities in leisure (i.e., individuals may enjoy leisure more in company of their spouse). Individual preferences and the Pareto weights (which capture the intra-household bargaining process) are identified by making use of panel data with couples and individuals who became a widow(er) in the observation period, along with the assumption that an individual's preferences can only change in a particular manner after the spouse's death. The change in preferences comes from changes in observable variables that can be controlled for (like mental health) and from the loss of the possibility to jointly enjoy leisure after the couple's dissolution. We apply the model to American households coming from the first nine waves of the Health and Retirement Study (1992-2008) and show that complementarities in leisure are indeed important when modeling spouses' labor supply choices.

Suggested Citation

  • Michaud, Pierre-Carl & Vermeulen, Frederic, 2011. "A collective labor supply model with complementarities in leisure: Identification and estimation by means of panel data," Labour Economics, Elsevier, vol. 18(2), pages 159-167, April.
  • Handle: RePEc:eee:labeco:v:18:y:2011:i:2:p:159-167
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    Cited by:

    1. Noelia Bernal & Frederic Vermeulen, 2014. "The Impact of an Increase in the Legal Retirement Age on the Effective Retirement Age," De Economist, Springer, vol. 162(2), pages 115-145, June.
    2. repec:spr:sjecst:v:153:y:2017:i:4:d:10.1007_bf03399512 is not listed on IDEAS
    3. André de Palma & Nathalie Picard & Ignacio Inoa, 2014. "Discrete choice decision-making with multiple decision-makers within the household," Chapters,in: Handbook of Choice Modelling, chapter 16, pages 363-382 Edward Elgar Publishing.
    4. Bernal Lobato, N., 2014. "Essays in applied microeconomics," Other publications TiSEM 9b638b3d-2f83-452a-b2c8-c, Tilburg University, School of Economics and Management.
    5. Cristina Borra & Martin Browning & Almudena Sevilla, 2017. "Marriage and Housework," Working Papers 2017-049, Human Capital and Economic Opportunity Working Group.
    6. Cherchye, Laurens & De Rock, Bram & Vermeulen, Frederic, 2012. "Economic well-being and poverty among the elderly: An analysis based on a collective consumption model," European Economic Review, Elsevier, vol. 56(6), pages 985-1000.
    7. Geyer, Johannes & Haan, Peter & Hammerschmid, Anna & Peters, Michael, 2018. "Labor Market and Distributional Effects of an Increase in the Retirement Age," IZA Discussion Papers 11618, Institute for the Study of Labor (IZA).
    8. Pierre Lefebvre & Philip Merrigan & Pierre-Carl Michaud, 2011. "The Recent Evolution of Retirement Patterns in Canada," Social and Economic Dimensions of an Aging Population Research Papers 287, McMaster University.
    9. Stancanelli, Elena G. F., 2016. "Couples' Retirement under Individual Pension Design: A Regression Discontinuity Study for France," IZA Discussion Papers 10322, Institute for the Study of Labor (IZA).
    10. Natalia Radchenko, 2016. "Welfare Sharing Within Households: Identification from Subjective Well-being Data and the Collective Model of Labor Supply," Journal of Family and Economic Issues, Springer, vol. 37(2), pages 254-271, June.
    11. Li, Jinjing & O'Donoghue, Cathal, 2011. "Retirement Choice Simulation in Household Settings with Heterogeneous Pension Plans," IZA Discussion Papers 5866, Institute for the Study of Labor (IZA).
    12. Amtul Hafeez & Eatzaz Ahmad, 2016. "Analysis of Joint Hours of Work Function of Currently Married Working Couples: A Case Study of Pakistan," Asian Journal of Social Sciences and Management Studies, Asian Online Journal Publishing Group, vol. 3(1), pages 75-81.
    13. Jeon, Sung-Hee & Pohl, R. Vincent, 2017. "Health and work in the family: Evidence from spouses’ cancer diagnoses," Journal of Health Economics, Elsevier, vol. 52(C), pages 1-18.
    14. repec:spr:jlabre:v:38:y:2017:i:4:d:10.1007_s12122-017-9258-3 is not listed on IDEAS
    15. repec:kap:itaxpf:v:24:y:2017:i:3:d:10.1007_s10797-016-9427-y is not listed on IDEAS
    16. repec:eee:hapoch:v1_457 is not listed on IDEAS
    17. Katherine Grace Carman & Angela Hung, 2017. "Household Retirement Saving The Location of Savings Between Spouses," Working Papers WR-1166, RAND Corporation.

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