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Collective Models of Labor Supply with Nonconvex Budget Sets and Nonparticipation: A Calibration Approach

  • Frederic Vermeulen


  • Olivier Bargain
  • Miriam Beblo
  • Denis Beninger
  • Richard Blundell
  • Raquel Carrasco
  • Maria-Concetta Chiuri
  • François Laisney
  • Valérie Lechene
  • Nicolas Moreau
  • Michal Myck
  • Javier Ruiz-Castillo

We suggest a methodology to calibrate a collective model with household-specific bargaining rules and marriage-specific preferences that incorporate leisure externalities. The empirical identification relies on the assumption that some aspects of individual preferences remain the same after marriage, so that estimation on single individuals can be used. The procedure maps the complete Pareto frontier of each household in the dataset and we define alternative measures of a power index. The latter is then regressed on relevant bargaining factors, including a set of variables retracing the potential relative contributions of the spouses to household disposable income. In its capacity to handle complex budget sets and labor force participation decisions of both spouses, this framework allows the comparison of unitary and collective predictions of labor supply reactions and welfare changes entailed by fiscal reforms in a realistic setting (see Michal Myck et al., 2006 ; Denis Beninger et al., 2006 ). Copyright Springer Science+Business Media, LLC 2006

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Article provided by Springer in its journal Review of Economics of the Household.

Volume (Year): 4 (2006)
Issue (Month): 2 (06)
Pages: 113-127

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Handle: RePEc:kap:reveho:v:4:y:2006:i:2:p:113-127
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  1. Keshab Bhattarai & John Whalley, 2002. "Discreteness and the Welfare Cost of Labour Supply Tax Distortions," UWO Department of Economics Working Papers 20023, University of Western Ontario, Department of Economics.
  2. Bargain, O. & Beblo, M. & Beninger, D. & Blundell, R. & Carrasco, R. & Chiuri, M-C. & Laisney, F. & Lechene, V. & Moreau, N. & Myck, M. & Ruiz-castillo, J. & Vermeulen, F.M.P., 2006. "Evaluating the move to a linear tax system in Germany and other European countries," Other publications TiSEM 6de42f6d-75fb-4170-ab69-7, Tilburg University, School of Economics and Management.
  3. Arthur van Soest, 1995. "Structural Models of Family Labor Supply: A Discrete Choice Approach," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 63-88.
  4. Anyck Dauphin & Abdel-Rahmen El Lahga & Bernard Fortin & Guy Lacroix, 2004. "Choix de consommation des ménages en présence de plusieurs décideurs," Cahiers de recherche 0433, CIRPEE.
  5. Richard Blundell & Alan Duncan & Costas Meghir, 1998. "Estimating Labor Supply Responses Using Tax Reforms," Econometrica, Econometric Society, vol. 66(4), pages 827-862, July.
  6. Rees, Ray, 1988. "Taxation and the Household," Munich Reprints in Economics 3411, University of Munich, Department of Economics.
  7. Apps, Patricia & Rees, Ray, 2001. "Household production, full consumption and the costs of children," Labour Economics, Elsevier, vol. 8(6), pages 621-648, December.
  8. 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.
  9. Yuk-fai Fong & Junsen Zhang, 2001. "The Identification of Unobservable Independent and Spousal Leisure," Journal of Political Economy, University of Chicago Press, vol. 109(1), pages 191-202, February.
  10. Hilary Hoynes, 1993. "Welfare Transfers in Two-Parent Families: Labor Supply and Welfare Participation Under AFDC-UP," NBER Working Papers 4407, National Bureau of Economic Research, Inc.
  11. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
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  13. Richard Blundell & Pierre-André Chiappori & Thierry Magnac & Costas Meghir, 1998. "Collective labour supply: heterogeneity and non-participation," IFS Working Papers W98/20, Institute for Fiscal Studies.
  14. Valerie Lechene & Martin Browning, 2001. "Caring and Sharing: Tests Between Alternative Models of Intra-Household Allocation," Economics Series Working Papers 70, University of Oxford, Department of Economics.
  15. Apps, Patricia, 2004. "Gender, time use, and models of the household," Policy Research Working Paper Series 3233, The World Bank.
  16. Laisney, François & Beninger, Denis & Beblo, Miriam, 2003. "Welfare Analysis of Fiscal Reforms: Does the Representation of the Family Decision Process Matter? Evidence for Germany," ZEW Discussion Papers 03-31, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  17. Manser, Marilyn & Brown, Murray, 1980. "Marriage and Household Decision-Making: A Bargaining Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 31-44, February.
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