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Collective Labour Supply, Taxes, and Intrahousehold Allocation: An Empirical Approach

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  • Bloemen, Hans

    (Vrije Universiteit Amsterdam)

Abstract

Most empirical studies of the impact of labour income taxation on the labour supply behaviour of households use a unitary modelling approach. In this paper we empirically analyze income taxation and the choice of working hours by combining the collective approach for household behaviour and the discrete hours choice framework with fixed costs of work. We identify the sharing rule parameters with data on working hours of both the husband and the wife within a couple. Parameter estimates are used to evaluate various model outcomes, like the wage elasticities of labour supply and the impacts of wage changes on the intrahousehold allocation of income. We also simulate the consequences of a policy change in the tax system. We find that the collective model has different empirical outcomes of income sharing than a restricted model that imposes income pooling. In particular, a specification with income pooling fails to capture asymmetries in the income sharing across spouses. These differences in outcomes have consequences for the evaluation of policy changes in the tax system and shed light on the effectiveness of certain policies.

Suggested Citation

  • Bloemen, Hans, 2015. "Collective Labour Supply, Taxes, and Intrahousehold Allocation: An Empirical Approach," IZA Discussion Papers 9464, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp9464
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    Cited by:

    1. Xiangdan Piao, 2023. "Intra-Household Income Management and Couple’s Relative Sharing of Income and Environment Sustainability in Japan," Sustainability, MDPI, vol. 15(7), pages 1-17, April.
    2. Bargain, Olivier B. & Lacroix, Guy & Tiberti, Luca, 2021. "Intrahousehold Resource Allocation and Individual Poverty: Assessing Collective Model Predictions against Direct Evidence on Sharing," IZA Discussion Papers 14406, Institute of Labor Economics (IZA).
    3. Boto-García, David & Mariel, Petr & Baños-Pino, José Francisco, 2023. "Intra-household bargaining for a joint vacation," Journal of choice modelling, Elsevier, vol. 47(C).
    4. Eleftherios Giovanis & Oznur Ozdamar, 2018. "Empirical Application of Collective Household Labour Supply Model in Iraq," Working Papers 1180, Economic Research Forum, revised 19 Apr 2018.
    5. Amábile Florencia, 2023. "Collective Labor Supply, Divisions of Domestic Work and Intra-household Bargaining," Asociación Argentina de Economía Política: Working Papers 4624, Asociación Argentina de Economía Política.
    6. Donni, Olivier & Molina, José Alberto, 2018. "Household Collective Models: Three Decades of Theoretical Contributions and Empirical Evidence," IZA Discussion Papers 11915, Institute of Labor Economics (IZA).
    7. Olivier Bargain, 2022. "Income Sources, Intra-Household Allocation And Individual Poverty," Commitment to Equity (CEQ) Working Paper Series 121, Tulane University, Department of Economics.

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    More about this item

    Keywords

    intrahousehold allocation; household behaviour and family economics; labour supply; taxation; model construction and estimation;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • D1 - Microeconomics - - Household Behavior
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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