We present identification and estimation results for the “collective” model of labour supply in which there are discrete choices, censoring of hours, and non-participation in employment. We derive the collective restrictions on labour supply functions and contrast them with restrictions implied by the usual “unitary” framework. Using the large changes in the wage structure between men and women in the U.K. over the last two decades, we estimate a collective labour supply model for married couples without children. The estimates of the sharing rule show that male wages and employment have a strong influence on bargaining power within couples.
Authors
Richard Blundell
Richard is an CPP Institute Co-director and the Ricardo Professor of Political Economy at University College London.
Costas Meghir
Costas is a Research Fellow of the IFS and a Douglas A. Warner III Professor of Economics at Yale University.
Thierry Magnac
Thierry is a Research Associate of IFS, a Research Fellow at CEPR, London and a Professor of Economics at the University of Toulouse,
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