Testing the sharing rule in a collective model of discrete labor supply with Spanish data

ABSTRACT

This paper estimates a collective model of discrete labor supply, using data from the Spanish Survey of Household Finances. The model allows identifying a sharing rule of household income. Then, it is used unique information for unemployed wives about intrahousehold transfers to estimate its accuracy. Results show that husbands’ hours of work are conditional on wives’ decisions, which mainly depend on non-labour income. Despite data availability, predicted sharing rules fit the data qualitatively well, and are mainly driven by wives’ potential income. Husbands show low levels of altruism, and non-participation appears to be especially detrimental for wives with high potential income.

KEYWORDS:

• Collective model
• sharing rule
• intrahousehold transfers
• Spanish survey of household finances

JEL CLASSIFICATION:

• D13
• J22

Acknowledgments

Remaining errors are my exclusive responsibility.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ This choice is intended to maximize the information available (14.16% of husbands and 19.10% wives were unemployed in the original sample). Nevertheless, as shown in Table A1, the standard deviations of work hours are slightly larger for women than for men. Therefore, the assumption of a discrete female labor supply might not be accurate. Analogous main results for male discrete labor supply are shown in Table A3 in the Appendix.

² $F\prime$ is a (positive) solution of $(F\prime {)}^2\left(\frac{b_3}{b_1}\frac{a_1}{a_3}-\frac{b_3}{b_1}\frac{a_1}{a_3}\frac{A_1}{A_3}-1+\frac{A_1}{A_3}\right)+F^{\prime }\left(1-\frac{a_1}{a_3}+2\frac{b_3}{b_1}\frac{a_1}{a_3}\frac{A_1}{A_3}-\frac{b_3}{b_1}\frac{A_1}{A_3}-\frac{A_1}{A_3}\right)+\left(\frac{a_1}{a_3}-\frac{b_3}{b_1}\frac{a_1}{a_3}\frac{A_1}{A_3}\right)=0$.

Additional information

Funding

This work was supported by the Government of Aragón [Program FSE 2014-2020, Project S32_17R].