Commitment and the Dynamics of Household Labor Supply

Alexandros Theloudis, Jorge Velilla, P.A. Chiappori, J. Ignacio Gimenez-Nadal, Jose Alberto Molina

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Abstract

The extent to which individuals commit to their partner for life has important implications. This paper develops a lifecycle collective model of the household, through which it characterizes behavior in three prominent alternative types of commitment: full, limited, and no commitment. We propose a test that distinguishes between all three types based on how contemporaneous and historical news affect household behavior. Our test permits heterogeneity in the degree of commitment across households. Using recent data from the Panel Study of Income Dynamics, we reject full and no commitment, while we find strong evidence for limited commitment.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages70
Volume2022-030
Publication statusPublished - 23 Nov 2022

Publication series

NameCentER Discussion Paper
Volume2022-030

Keywords

  • household behavior
  • intertemporal choice
  • commitment
  • collective model
  • family labor supply
  • wages
  • PSID

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