Working Paper: CEPR ID: DP16237
Authors: Monika Merz; Almut Balleer; Tamas K. Papp
Abstract: We present a model of the time-allocation decision of spouses in order to study the role of heterogeneity in preferences and wages for couples’ labor supply. Spouses differ in their tastes for market consumption and non-market goods and activities, and also in their offered or earned wages. They interact in their choices of market hours, homework, and leisure. We estimate the model for married or cohabiting couples in the 2001/02 wave of the German Time-Use Survey using Bayesian techniques. We generate gender-specific own- and cross-wage elasticities of market hours in the cross-section. Elasticities are significantly larger, if the wage shock is asymmetric across partners, not symmetric. Aggregating preferences and wages by gender and comparing outcomes for a representative couple with those from heterogeneous couples yields a discrepancy between the alternative aggregate wage-elasticities. Its size varies with the type of wage shock and the distribution of spouses across the preference-wage space.
Keywords: time use; spouses; labor supply; aggregation; bayesian estimation
JEL Codes: D12; D13; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| spouses' differing tastes for market and nonmarket goods (D13) | time allocation decisions (J29) |
| time allocation decisions (J29) | market hours worked (J29) |
| asymmetric wage shocks (J31) | labor supply responses (J20) |
| own-wage elasticity for males (J31) | market hours (G14) |
| own-wage elasticity for females (J31) | market hours (G14) |
| aggregating preferences and wages by gender (J31) | discrepancies in estimated aggregate wage elasticities (J39) |
| discrepancies in estimated aggregate wage elasticities (J39) | understanding labor supply dynamics (J20) |