An Empirical Model of Collective Household Labour Supply with Non‐Participation

Abstract

I present a structural empirical model of collective household labour supply that includes the non‐participation decision. I specify a simultaneous model for hours, participation and wages of husband and wife. I discuss the problems of identification and statistical coherency that arise in the application of the collective household labour supply model. The model includes random effects and it is estimated using a panel data set of Dutch couples. The estimates allow me to check the underlying regularity conditions on individual preferences and to obtain estimates of the sharing rule that governs the division of household income between husband and wife.

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