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

Author

Listed:
  • Frédéric Vermeulen

    (Tilburg University [Netherlands])

  • Olivier Bargain

    (IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics, Centre for Household, Income, Labour and Demographic Economics (CHILD) - Centre for Household, Income, Labour and Demographic Economics (CHILD))

  • Miriam Beblo

    (Centre for European Economic Research (Mannheim, Germany) - Zentrum für Europäische Wirtschaftsforschung (ZEW) - University of Mannheim = Universität Mannheim)

  • Denis Beninger

    (Centre for European Economic Research (Mannheim, Germany) - Zentrum für Europäische Wirtschaftsforschung (ZEW) - University of Mannheim = Universität Mannheim)

  • Richard Blundell

    (IFS - Laboratory of the Institute for Fiscal Studies - Institute for Fiscal Studies, UCL - University College London [UCL])

  • Raquel Carrasco

    (UC3M - Universidad Carlos III de Madrid = University of Carlos III of Madrid)

  • Marie-Concetta Chiuri

    (Centre for Household, Income, Labour and Demographic Economics (CHILD) - Centre for Household, Income, Labour and Demographic Economics (CHILD), UNIBA - Università degli studi di Bari Aldo Moro = University of Bari Aldo Moro)

  • Francois Laisney

    (BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique, Centre for European Economic Research (Mannheim, Germany) - Zentrum für Europäische Wirtschaftsforschung (ZEW) - University of Mannheim = Universität Mannheim)

  • Valérie Lechene

    (IFS - Laboratory of the Institute for Fiscal Studies - Institute for Fiscal Studies, University of Oxford)

  • Nicolas Moreau

    (GREMAQ - Groupe de recherche en économie mathématique et quantitative - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique, LIRHE - Laboratoire Interdisciplinaire de recherche sur les Ressources Humaines et l'Emploi - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - CNRS - Centre National de la Recherche Scientifique)

  • Michal Myck

    (IFS - Laboratory of the Institute for Fiscal Studies - Institute for Fiscal Studies, DIW Berlin - Deutsches Institut für Wirtschaftsforschung)

  • Javier Ruiz-Castillo

    (UC3M - Universidad Carlos III de Madrid = University of Carlos III of Madrid)

Abstract

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).

Suggested Citation

  • Frédéric Vermeulen & Olivier Bargain & Miriam Beblo & Denis Beninger & Richard Blundell & Raquel Carrasco & Marie-Concetta Chiuri & Francois Laisney & Valérie Lechene & Nicolas Moreau & Michal Myck & , 2006. "Collective Models of Labor Supply with Nonconvex Budget Sets and Nonparticipation: A Calibration Approach," Post-Print hal-00279207, HAL.
    • Handle: RePEc:hal:journl:hal-00279207
    DOI: 10.1007/s11150-006-0002-7
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    Keywords

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    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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