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Heterogeneous Couples, Household Interactions and Labor Supply Elasticities of Married Women

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This paper estimates labor supply elasticities of married men and women allowing for heterogeneity among couples (in educational attainments of husbands and wives) and explicitly modeling how household members interact and make labor supply decisions. We find that the labor supply decisions of husbands and wives are interdependent unless both spouses are highly educated (college or above). Couples with high education, the labor supply decisions of husband and wife are jointly determined only if they have pre-school age children. We also find that labor supply elasticities differ greatly between households. The participation own-wage elasticity is largest (0.77) for women with low education married to men with low education, and smallest (0.03) for women with high education married to men with low education. The participation own-wage elasticities for women with low education married to highly educated men and for women with high education married to highly educated men are similar and fall between these two extremes (about 0.30 for each). For all types of couples, participation non-labor family income elasticity is small. We also find that participation cross-wage elasticities for married women are relatively small (less than -0.05) if they are married to men with low education and larger (-0.37) if they are married to highly educated men. Allowing for heterogeneity across couples yields an overall participation wage elasticity of 0.56, a cross wage elasticity of -0.13 and an income elasticity of -0.006 for married women. The analysis in this paper provides a natural framework to study how changes in educational attainments and household structure affect aggregate labor supply elasticities.

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  • Kaya, Ezgi, 2014. "Heterogeneous Couples, Household Interactions and Labor Supply Elasticities of Married Women," Cardiff Economics Working Papers E2014/18, Cardiff University, Cardiff Business School, Economics Section.
  • Handle: RePEc:cdf:wpaper:2014/18
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    Cited by:

    1. Lusi Liao & Sasiwimon Warunsiri Paweenawat, 2021. "The inversion of married women's labour supply and wage: Evidence from Thailand," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 35(1), pages 82-98, May.
    2. Christian Bredemeier, 2015. "Household Specialization and the Labor-Supply Elasticities of Women and Men," Working Paper Series in Economics 81, University of Cologne, Department of Economics.
    3. Lusi Liao & Sasiwimon Warunsiri Paweenawat, 2018. "Labour Supply of Married Women in Thailand: 1985-2016," PIER Discussion Papers 88, Puey Ungphakorn Institute for Economic Research, revised Jun 2018.
    4. Santiago Pereda Fernández, 2016. "Copula-based random effects models for clustered data," Temi di discussione (Economic working papers) 1092, Bank of Italy, Economic Research and International Relations Area.

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    More about this item

    Keywords

    Labor supply elasticity; household labor supply; household interactions; educational homogamy;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • D10 - Microeconomics - - Household Behavior - - - General
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General

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