A collective labor supply model with complementarities in leisure: Identification and estimation by means of panel data

P.C. Michaud, F.M.P. Vermeulen

Research output: Contribution to journalArticleScientificpeer-review

21 Citations (Scopus)

Abstract

We present a novel identification strategy for a collective labor supply model that allows for complementarities in leisure (i.e., individuals may enjoy leisure more in company of their spouse). Individual preferences and the Pareto weights (which capture the intra-household bargaining process) are identified by making use of panel data with couples and individuals who became a widow(er) in the observation period, along with the assumption that an individual's preferences can only change in a particular manner after the spouse's death. The change in preferences comes from changes in observable variables that can be controlled for (like mental health) and from the loss of the possibility to jointly enjoy leisure after the couple's dissolution. We apply the model to American households coming from the first nine waves of the Health and Retirement Study (1992–2008) and show that complementarities in leisure are indeed important when modeling spouses' labor supply choices.
Original languageEnglish
Pages (from-to)159-167
JournalLabour Economics
Volume18
Issue number2
Publication statusPublished - 2011

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