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Household Time Allocation and Modes of Behavior: A Theory of Sorts

  • Del Boca, Daniela

    ()

    (University of Turin)

  • Flinn, Christopher

    ()

    (New York University)

We develop a simple model of household time allocation decisions under strong functional form assumptions regarding preferences and household production technology. We argue that the specification is general when allowing for unrestrictive forms of population heterogeneity in the parameters characterizing these functions. Moreover, we argue that the model is not capable of distinguishing among elements of a class of behavioral rules, including Nash bargaining and Nash equilibrium, without restricting population heterogeneity in arbitrary ways. However, preferences over mates for any given set of male and female characteristics will be a function of the behavioral rules used in married households. Using data from the PSID on market hours and time spent in household production, we estimate the marginal distribution of male and female characteristics and our two alternative behavioral assumptions, and perform some formal and informal comparisons of the Nash bargaining and Nash equilibrium rules’ ability to predict the marital sorts observed in the data. Given the simplicity of the model of household behavior and marriage market equilibrium, it is perhaps not surprising that neither model provides good predictions. Overall, the evidence is slightly more supportive of the hypothesis that households behave noncooperatively.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1821.

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Length: 36 pages
Date of creation: Oct 2005
Date of revision:
Handle: RePEc:iza:izadps:dp1821
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  1. Raquel Fernandez & Nezih Guner & John Knowles, 2001. "Love and Money: A Theoretical and Empirical Analysis of Household Sorting and Inequality," NBER Working Papers 8580, National Bureau of Economic Research, Inc.
  2. Fernández, Raquel & Fogli, Alessandra, 2005. "Culture: An Empirical Investigation of Beliefs, Work and Fertility," CEPR Discussion Papers 5089, C.E.P.R. Discussion Papers.
  3. Roth, Alvin E. & Sotomayor, Marilda, 1992. "Two-sided matching," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 16, pages 485-541 Elsevier.
  4. Aiyagari, S.R. & Greenwood, J. & Guner, N., 1999. "On the State of the Union," RCER Working Papers 462, University of Rochester - Center for Economic Research (RCER).
  5. Daniela Del Boca & Christopher J. Flinn, 2006. "Modes of Spousal Interaction and the Labor Market Environment," Carlo Alberto Notebooks 14, Collegio Carlo Alberto.
  6. Jeremy Greenwood & Nezih Guner & and John Knowles, 1999. "More on marriage, fertility, and the distribution of income," Working Paper 9904, Federal Reserve Bank of Cleveland.
  7. Marjorie B. McElroy, 1990. "The Empirical Content of Nash-Bargained Household Behavior," Journal of Human Resources, University of Wisconsin Press, vol. 25(4), pages 559-583.
  8. Michael J. Brien & Lee A. Lillard & Steven Stern, 2006. "Cohabitation, Marriage, And Divorce In A Model Of Match Quality," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(2), pages 451-494, 05.
  9. Chiappori, P.A., 1989. "Collective Labour Supply and Welfare," DELTA Working Papers 89-07, DELTA (Ecole normale supérieure).
  10. Martin Browning & P.A. Chiappori, 1996. "Efficient Intra-Household Allocations - A General Characterization and Empirical Tests," Discussion Papers 96-10, University of Copenhagen. Department of Economics.
  11. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
  12. J. Ignacio Garcia-Perez & Silvio Rendon, 2004. "Family job search and consumption: the added worker effect revisited," 2004 Meeting Papers 518, Society for Economic Dynamics.
  13. Zhiqi Chen & Frances Woolley, 1999. "A Cournot-Nash Model of Family Decision Making," Carleton Economic Papers 99-13, Carleton University, Department of Economics, revised Oct 2001.
  14. Eugene Choo & Aloysius Siow, 2006. "Who Marries Whom and Why," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 175-201, February.
  15. Flinn, Christopher J, 2000. "Modes of Interaction between Divorced Parents," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(3), pages 545-78, August.
  16. Randall P. Walsh & Murat F. Iyigun, 2004. "Building the Family Nest: A Collective Household Model with Competing Pre-Marital Investments and Spousal Matching," 2004 Meeting Papers 168, Society for Economic Dynamics.
  17. Del Boca, Daniela & Flinn, Christopher J, 1995. "Rationalizing Child-Support Decisions," American Economic Review, American Economic Association, vol. 85(5), pages 1241-62, December.
  18. Dey, Matthew & Flinn, Christopher, 2008. "Household search and health insurance coverage," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 43-63, July.
  19. John K. Dagsvik & Ane S. Flaatten & Helge Brunborg, 1998. "A Behavioral Two-Sex Marriage Model," Discussion Papers 238, Statistics Norway, Research Department.
  20. Bound, John, et al, 1994. "Evidence on the Validity of Cross-Sectional and Longitudinal Labor Market Data," Journal of Labor Economics, University of Chicago Press, vol. 12(3), pages 345-68, July.
  21. McElroy, Marjorie B & Horney, Mary Jean, 1981. "Nash-Bargained Household Decisions: Toward a Generalization of the Theory of Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 333-49, June.
  22. 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.
  23. Daniel McFadden, 1977. "Modelling the Choice of Residential Location," Cowles Foundation Discussion Papers 477, Cowles Foundation for Research in Economics, Yale University.
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