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Review of Economics of the Household

, Volume 4, Issue 2, pp 113–127 | Cite as

Collective Models of Labor Supply with Nonconvex Budget Sets and Nonparticipation: A Calibration Approach

  • Frederic VermeulenEmail author
  • Olivier Bargain
  • Miriam Beblo
  • Denis Beninger
  • Richard Blundell
  • Raquel Carrasco
  • Maria-Concetta Chiuri
  • François Laisney
  • Valérie Lechene
  • Nicolas Moreau
  • Michal Myck
  • Javier Ruiz-Castillo
Article

Abstract

We suggest a methodology to calibrate a collective model with household-specific bargaining rules and marriage-specific preferences that incorporate leisure externalities. The empirical identification relies on the assumption that some aspects of individual preferences remain the same after marriage, so that estimation on single individuals can be used. The procedure maps the complete Pareto frontier of each household in the dataset and we define alternative measures of a power index. The latter is then regressed on relevant bargaining factors, including a set of variables retracing the potential relative contributions of the spouses to household disposable income. In its capacity to handle complex budget sets and labor force participation decisions of both spouses, this framework allows the comparison of unitary and collective predictions of labor supply reactions and welfare changes entailed by fiscal reforms in a realistic setting (see Michal Myck et al., 2006; Denis Beninger et al., 2006).

Keywords

Collective model Household labor supply Intrahousehold allocations Tax reform 

JEL Classification

D11 D12 J22 

Notes

Acknowledgements

This paper exploits work done in the one-year project “Welfare analysis of fiscal and social security reforms in Europe: does the representation of family decision processes matter?”, partly financed by the EU, General Directorate Employment and Social Affairs, under Grant VS/2000/0778. We are grateful for comments and advice from the Editors, anonymous referees, François Bourguignon, Martin Browning, Pierre-André Chiappori, Olivier Donni, Andreas Krüpe, Jason Lee, Ernesto Longobardi, Isabelle Maret, Costas Meghir, Nathalie Picard, Hubert Stahn, Ian Walker and Bernarda Zamora, as well as participants in conferences and seminars too numerous to be quoted here. The usual disclaimer applies.

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Copyright information

© Springer Science+Business Media, LLC 2006

Authors and Affiliations

  • Frederic Vermeulen
    • 1
    Email author
  • Olivier Bargain
    • 2
    • 3
  • Miriam Beblo
    • 4
  • Denis Beninger
    • 4
  • Richard Blundell
    • 5
    • 6
  • Raquel Carrasco
    • 7
  • Maria-Concetta Chiuri
    • 3
    • 8
  • François Laisney
    • 4
    • 9
  • Valérie Lechene
    • 5
    • 10
  • Nicolas Moreau
    • 11
  • Michal Myck
    • 5
    • 12
  • Javier Ruiz-Castillo
    • 7
  1. 1.Tilburg UniversityTilburgNetherlands
  2. 2.IZABonnGermany
  3. 3.CHILDTurinItaly
  4. 4.ZEWMannheimGermany
  5. 5.IFSLondonUK
  6. 6.UCLLondonUK
  7. 7.Universidad Carlos IIIMadridSpain
  8. 8.Universitá di BariBariItaly
  9. 9.BETA-ThemeULPStrasbourgFrance
  10. 10.Wadham CollegeOxfordEngland
  11. 11.GREMAQ and LIRHEToulouseFrance
  12. 12.DIWBerlinGermany

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