Empirical Economics

, Volume 7, Issue 1, pp 175–189 | Cite as

Estimating leisure goods models on time series of cross sections

Article

Abstract

This paper analyses the joint modelling of labour supply and consumer expenditure in a utility maximizing framework. A recent demand system (AIDS) is augmented to include labour supply and incorporate time series/cross section wage rate variation and, then, estimated on pooled F.E.S. data [Family Expenditure Surveys]. A method of non linear FIML is applied. The paper questions the near unanimous ‘evidence’ on backward bending labour supply in previous studies and, using counter evidence, argues that such a bend could have been partly due to the restrictive utility forms usually employed. In addition, hypotheses relating to effects of price/wage movements on composition of ‘full income’ are tested, and the welfare implications of the estimated parameter estimates worked out.

Keywords

Labour Supply Real Wage Demand System Budget Share Household Budget Survey 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Abbott, M., andO. Ashenfelter: Labour Supply, Commodity Demand and the Allocation of Time. Review of Economic Studies43, 1976, 389–412.CrossRefGoogle Scholar
  2. Barnett, W.A.: The Joint Allocation of Leisure and Goods Expenditure. Econometrica47, 1979, 539–563.CrossRefGoogle Scholar
  3. Barten, A.P.: Family Composition, Prices and Expenditure Patterns. Econometric Analysis for National Economic Planning. Ed. by P.E. Hart, G. Mills, and J.K. Whittaker. London 1964.Google Scholar
  4. —: The Systems of Consumer Demand Functions Approach: A Review. Econometrica45, 1977, 23–51.CrossRefGoogle Scholar
  5. Barzel, Y., andR.J. McDonald: Assets, Subsistence and the Supply Curve of Labour. American Economic Review63, 1973, 621–633.Google Scholar
  6. Betancourt, R.R.: The Estimation of Price Elasticities from Cross Section Data Under Additive Preferences. International Economic Review12, 1971, 283–292.CrossRefGoogle Scholar
  7. Betancourt, R.R.: Household Behaviour in Chile: An Analysis of Cross Section Data. Patterns in Household Demand and Saving. Chap. 8. Ed. by C. Lluch, A.A. Powell, and R.A. Williams. Oxford 1977.Google Scholar
  8. Blundell, R.W., andI. Walker: Demand for Goods and Leisure with Female Labour Supply and Rationing: Testing for Separability. University of Manchester Discussion Paper. Manchester June 1980.Google Scholar
  9. Brown, A., andA.S. Deaton: Surveys in Applied Economics: Models of Consumer Behaviour. Economic Journal82, 1972, 1145–1236.CrossRefGoogle Scholar
  10. Cain, G., andH. Watts (eds.): Income Maintenance and Labour Supply. Chicago 1973.Google Scholar
  11. Darrough, M.N.: A Model of Consumption and Leisure in an Intertemporal Framework: A Systematic Treatment using Japanese Data. International Economic Review18, 1977, 677–696.CrossRefGoogle Scholar
  12. Deaton, A.S., andJ. Muellbauer: An Almost Ideal Demand System. American Economic Review70, 1980, 312–326.Google Scholar
  13. Diewert, W.E.: Applications of Duality Theory. Frontiers of Quantitative Economics, Vol. II. Ed. by M.D. Intrilligator and D.A. Kendrick. Amsterdam 1974a, 107–171.Google Scholar
  14. —: Intertemporal Consumer Theory and the Demand for Durables. Econometrica42, 1974b, 497–516.CrossRefGoogle Scholar
  15. Gorman, W.M.: Tricks with Utility Functions. Essays in Economic Analysis: Proceedings of the 1975 AUTE Conference, Sheffield. Ed. by M.J. Artis, and A.R. Nobay. Cambridge 1976.Google Scholar
  16. Kiefer, N.M.: Quadratic Utility, Labour Supply and Commodity Demand. Studies in Non linear Estimation, Chap. 8. Ed. by S.M. Goldfield, and R.E. Quandt. Cambridge 1976.Google Scholar
  17. —: A Bayesian Analysis of Commodity Demand and Labour Supply. International Economic Review18, 1977, 209–218.CrossRefGoogle Scholar
  18. Killingsworth, M.R.: Neoclassical Labor Supply Models: A Survey of Recent Literature on Determinants of the Supply of Time to the Labor Market. Unpublished paper, Fisk University, Nashville 1975.Google Scholar
  19. Lau, L.J., W.L. Lin, andP.A. Yotopoulos: The Linear Logarithmic Expenditure System: An Application To Consumption-Leisure Choice. Econometrica46, 1978, 843–868.CrossRefGoogle Scholar
  20. Leser, C.E.V.: Income, Household Size and Price Changes 1953–1973. Oxford Bulletin of Economics and Statistics38, 1976, 1–10.CrossRefGoogle Scholar
  21. Lewis, H.G.: Economics of Time and Labour Supply. American Economic Review, Papers and Proceedings65, 1975, 29–34.Google Scholar
  22. Lluch, C.: The Extended Linear Expenditure System. European Economic Review4, 1973, 21–32.CrossRefGoogle Scholar
  23. Muellbauer, J.: Recent U.K. experience of prices and inequality: an application of true cost of living and real income indices. Economic Journal84, 1974a, 32–55.CrossRefGoogle Scholar
  24. —: Household Composition, Engel Curves and Welfare Comparisons between Households. European Economic Review5, 1974b, 103–122.CrossRefGoogle Scholar
  25. Muellbauer, J.: Linear Aggregation in Neoclassical Labour Supply. Review of Economic Studies, forthcoming (1980).Google Scholar
  26. Murray, M.P.: A Re-interpretation of the Traditional Income-Leisure Model with Application To In-Kind Subsidy Programs. Journal of Public Economics, 1980, 79–83.Google Scholar
  27. Owen, J.: The Price of Leisure. Rotterdam 1969.Google Scholar
  28. Phlips, L.: The Demand for Leisure and Money. Econometrica46, 1978, 1025–1043.CrossRefGoogle Scholar
  29. Phlips, L., andP. Pieraerts: Substitution vs Addiction in the True Index of Real Wages. American Economic Review69, 1979, 977–982.Google Scholar
  30. Pollak, R.A.: Group Cost-of-Living Indexes. American Economic Review, Papers and Proceedings70, 1980, 273–278.Google Scholar
  31. Pollak, R.A., andT.J. Wales: Comparison of the Quadratic Expenditure Systems and Translog Demand Systems with Alternative Specifications of Demographic Effects. Econometrica, April 1980.Google Scholar
  32. Ray, R.: Analysis of a Time Series of Household Expenditure Surveys for India. Review of Economics and Statistics, 1980a, 595–602.Google Scholar
  33. Ray, R.: The Testing and Estimation of Complete Demand Systems on Household Budget Surveys: A Comparative Study on Time Series and Pooled Cross Section Data. Paper presented at Fourth World Congress of the Econometric Society in France. 1980b.Google Scholar
  34. —: The Cost of Children: An Investigation into its Variation with Relative Price, Utility Levels and its role in Demand Systems. Mimeographed, University of Manchester, Manchester 1980c.Google Scholar
  35. Stone, R.: Linear Expenditure Systems and Demand Analysis: An Application to the Pattern of British Demand. The Economic Journal64, 1954, 511–527.CrossRefGoogle Scholar
  36. Wymer, C.R.: Full Information Maximum Likelihood Estimation with Non Linear Restrictions, (mimeographed, L.S.E.) and Computer Program “Resimul Manual”. London 1968.Google Scholar

Copyright information

© Physica-Verlag 1982

Authors and Affiliations

  • R. Ray
    • 1
  1. 1.Faculty of Economic and Social StudiesUniversity of ManchesterManchesterUK

Personalised recommendations