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Modes of Spousal Interaction and the Labor Market Environment

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  • Daniela Del Boca
  • Christopher J. Flinn

Abstract

We formulate a model of household behavior in which cooperation is costly and in which these costs vary across households. Some households rationally decide to behave noncooperatively, which in our context is an e?cient outcome. An intriguing feature of the model is that, while the welfare of the spouses is continuous in the state variables, labor supply decisions are not. Small changes in state variables may result in large changes in labor supplies when the household switches its mode of behavior. We estimate the model using a nationally representative sample of Italian households and find that the costly cooperation model signfificantly outperforms a noncooperative model. This suggests the possibility of attaining large gains in aggregate labor supply by adopting policies which promote cooperative household behavior.

Suggested Citation

  • Daniela Del Boca & Christopher J. Flinn, 2004. "Modes of Spousal Interaction and the Labor Market Environment," CHILD Working Papers wp12_05, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
    • Handle: RePEc:wpc:wplist:wp12_05
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    Cited by:

    1. Del Boca, Daniela & Flinn, Christopher, 2005. "Household Time Allocation and Modes of Behavior: A Theory of Sorts," IZA Discussion Papers 1821, Institute of Labor Economics (IZA).
    2. Antonio Romero-Medina & Matteo Triossi, 2013. "Games with capacity manipulation: incentives and Nash equilibria," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 41(3), pages 701-720, September.
    3. Zvi Eckstein & Osnat Lifshitz, 2011. "Dynamic Female Labor Supply," Econometrica, Econometric Society, vol. 79(6), pages 1675-1726, November.
    4. Alessandro Cigno, 2011. "The Economics of Marriage," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 12(s1), pages 28-41, May.
    5. Bargain, Olivier & Moreau, Nicolas, 2005. "Cooperative Models in Action: Simulation of a Nash-Bargaining Model of Household Labor Supply with Taxation," IZA Discussion Papers 1480, Institute of Labor Economics (IZA).
    6. Giannelli, Gianna Claudia & Francavilla, Francesca, 2007. "Do Family Planning Programmes Help Women's Employment? The Case of Indian Mothers," IZA Discussion Papers 2762, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Spousal Interaction; Labor Market;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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