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Human capital and the intertemporal substitution for leisure: empirical evidence for Spain

Author

Listed:
  • Antonio Cutanda

    (Universidad de Valencia, Valencia, Spain ORCID number: 0000-0003-2066-4632)

  • Juan A. Sanchis-Llopis

    (Universidad de Valencia and ERICES, Valencia, Spain ORCID number: 0000-0001-9664-4668)

Abstract

Spain. Further, we will study whether human capital accumulation affects this key elasticity. For this purpose, we estimate the equation for the intertemporal substitution without accounting for human capital and introducing it. We build a pseudo-panel data set combining the Spanish Family Expenditure Survey and the Labour Survey over the period 1987-1997. From our results the estimate of the intertemporal elasticity of leisure is about 0.25, that is comparable to estimates found for other economies. Further, considering the effect of human capital significantly increases the estimated elasticity of intertemporal substitution for leisure, obtaining an estimate about 0.5, what confirms the existence of a bias if we do not consider human capital. Finally, this bias is larger for the younger cohorts than for the older ones.

Suggested Citation

  • Antonio Cutanda & Juan A. Sanchis-Llopis, 2022. "Human capital and the intertemporal substitution for leisure: empirical evidence for Spain," Working Papers 2116, Department of Applied Economics II, Universidad de Valencia.
    • Handle: RePEc:eec:wpaper:2116
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    More about this item

    Keywords

    Euler equation; Instrumental variables; Intertemporal Substitution for leisure; Panel data.;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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